Tapestry (NYSE:TPR – Get Free Report) and Carter’s (NYSE:CRI – Get Free Report) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.
Risk and Volatility
Tapestry has a beta of 1.42, meaning that its stock price is 42% 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.
Valuation and Earnings
This table compares Tapestry 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 | |
| Tapestry | $8.00 billion | 2.89 | $1.53 billion | $7.29 | 15.92 |
| Carter’s | $2.98 billion | 0.39 | $91.80 million | $5.34 | 5.91 |
Tapestry has higher revenue and earnings than Carter’s. Carter’s is trading at a lower price-to-earnings ratio than Tapestry, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
90.8% of Tapestry shares are owned by institutional investors. 1.3% of Tapestry shares are owned by insiders. Comparatively, 3.2% of Carter’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Profitability
This table compares Tapestry and Carter’s’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Tapestry | 19.09% | 254.95% | 22.75% |
| Carter’s | 6.55% | 12.78% | 4.67% |
Dividends
Tapestry pays an annual dividend of $1.85 per share and has a dividend yield of 1.6%. Carter’s pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. Tapestry pays out 25.4% of its earnings in the form of a dividend. Carter’s pays out 18.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Tapestry has raised its dividend for 3 consecutive years. Carter’s is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Tapestry and Carter’s, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Tapestry | 0 | 4 | 15 | 2 | 2.90 |
| Carter’s | 0 | 5 | 3 | 1 | 2.56 |
Tapestry currently has a consensus price target of $170.00, suggesting a potential upside of 46.44%. Carter’s has a consensus price target of $40.86, suggesting a potential upside of 29.54%. Given Tapestry’s stronger consensus rating and higher probable upside, analysts clearly believe Tapestry is more favorable than Carter’s.
Summary
Tapestry beats Carter’s on 15 of the 18 factors compared between the two stocks.
About Tapestry
Tapestry, Inc. provides luxury accessories and branded lifestyle products in the United States, Japan, Greater China, and internationally. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman. It offers women’s handbags; and women’s accessories, such as small leather goods which includes mini and micro handbags, money pieces, wristlets, pouches, and cosmetic cases, as well as novelty accessories including address books, time management and travel accessories, sketchbooks, and portfolios; and belts, key rings, and charms. The company also provides men products, which includes bag collections, such as business cases, computer bags, messenger-style bags, backpacks, and totes; small leather goods including wallets, card cases, travel organizers, and belts; and footwear, watches, fragrances, sunglasses, novelty accessories, and ready-to-wear items. In addition, it offers other products including women’s footwear and fragrances; eyewear and sunglasses; and jewelry, such as bracelets, necklaces, rings, and earrings, watches, and other women’s seasonal lifestyle apparel collections, including outerwear, ready-to-wear and cold weather accessories, such as gloves, scarves, and hats. Further, the company provides kids items, housewares, and home accessories, such as fashion bedding and tableware, stationery, and gifts. It offers its products through e-commerce sites and concession shop-in-shops, wholesale, and third-party distributors under the Coach, Kate Spade, and Stuart Weitzman brand names. The company was formerly known as Coach, Inc. and changed its name to Tapestry, Inc. in October 2017. Tapestry, Inc. was founded in 1941 and is headquartered in New York, New York.
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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