Under Armour (NYSE:UA – Get Free Report) and Carter’s (NYSE:CRI – Get Free Report) are both small-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, risk, profitability, valuation and earnings.
Risk and Volatility
Under Armour has a beta of 1.53, meaning that its stock price is 53% more volatile than the S&P 500. Comparatively, Carter’s has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.
Earnings & Valuation
This table compares Under Armour and Carter’s”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Under Armour | $4.93 billion | 0.42 | -$495.64 million | ($1.15) | -4.14 |
| Carter’s | $2.90 billion | 0.43 | $91.80 million | $5.34 | 6.30 |
Carter’s has lower revenue, but higher earnings than Under Armour. Under Armour is trading at a lower price-to-earnings ratio than Carter’s, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
36.3% of Under Armour shares are held by institutional investors. 15.6% of Under Armour shares are held by insiders. Comparatively, 3.2% of Carter’s shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Profitability
This table compares Under Armour and Carter’s’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Under Armour | -9.99% | 4.04% | 1.37% |
| Carter’s | 6.55% | 12.78% | 4.67% |
Analyst Ratings
This is a summary of recent recommendations and price targets for Under Armour and Carter’s, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Under Armour | 2 | 1 | 0 | 0 | 1.33 |
| Carter’s | 1 | 4 | 3 | 2 | 2.60 |
Under Armour presently has a consensus target price of $5.50, suggesting a potential upside of 15.42%. Carter’s has a consensus target price of $39.00, suggesting a potential upside of 15.99%. Given Carter’s’ stronger consensus rating and higher probable upside, analysts clearly believe Carter’s is more favorable than Under Armour.
Summary
Carter’s beats Under Armour on 11 of the 15 factors compared between the two stocks.
About Under Armour
Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth. The company provides its apparel in compression, fitted, and loose fit types. It also offers footwear products for running, training, basketball, cleated sports, recovery, and outdoor applications. In addition, the company provides accessories, which include gloves, bags, headwear, and sports masks; and digital subscription, advertising, and other digital business services. It primarily offers its products under the UNDER ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, I WILL, UA Logo, ARMOUR FLEECE, and ARMOUR BRA brands. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, mono-branded Under Armour retail stores, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through a network of 439 Brand and Factory House stores, as well as through e-commerce websites. It operates in the United States, Canada, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. Under Armour, Inc. was incorporated in 1996 and is headquartered in Baltimore, Maryland.
About Carter’s
Carter’s, Inc. engages in the business of brand marketing of young children’s apparel. It operates through the following segments: the United States (US) Retail, US Wholesale, and International. The US Retail segment includes selling products through retail stores and ecommerce websites. The US Wholesale segment focuses on wholesale partners. The International segment is involved in selling in retail stores and ecommerce websites in Canada and Mexico, and to international wholesale customers and licensees. The company was founded by William Carter in 1865 and is headquartered in Atlanta, GA.
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