Financial Analysis: Tile Shop Hldgs (TTS) versus Lowe’s Companies (NYSE:LOW)

Tile Shop Hldgs (NASDAQ: TTS) and Lowe’s Companies (NYSE:LOW) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, dividends, profitabiliy, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Tile Shop Hldgs and Lowe’s Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tile Shop Hldgs 5.95% 17.46% 9.52%
Lowe’s Companies 4.22% 56.78% 10.14%

Analyst Ratings

This is a summary of current recommendations for Tile Shop Hldgs and Lowe’s Companies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tile Shop Hldgs 0 3 0 0 2.00
Lowe’s Companies 1 9 14 0 2.54

Tile Shop Hldgs presently has a consensus price target of $20.33, indicating a potential upside of 2.43%. Lowe’s Companies has a consensus price target of $85.44, indicating a potential upside of 12.05%. Given Lowe’s Companies’ stronger consensus rating and higher possible upside, analysts plainly believe Lowe’s Companies is more favorable than Tile Shop Hldgs.

Insider & Institutional Ownership

69.1% of Tile Shop Hldgs shares are owned by institutional investors. Comparatively, 74.6% of Lowe’s Companies shares are owned by institutional investors. 24.3% of Tile Shop Hldgs shares are owned by insiders. Comparatively, 0.1% of Lowe’s Companies shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Tile Shop Hldgs has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500. Comparatively, Lowe’s Companies has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Dividends

Tile Shop Hldgs pays an annual dividend of $0.20 per share and has a dividend yield of 1.0%. Lowe’s Companies pays an annual dividend of $1.40 per share and has a dividend yield of 1.8%. Tile Shop Hldgs pays out 52.6% of its earnings in the form of a dividend. Lowe’s Companies pays out 44.0% 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. Tile Shop Hldgs has raised its dividend for 54 consecutive years. Lowe’s Companies is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Tile Shop Hldgs and Lowe’s Companies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Tile Shop Hldgs $331.58 million 3.09 $62.70 million $0.38 52.24
Lowe’s Companies $66.64 billion 0.97 $7.51 billion $3.18 23.98

Lowe’s Companies has higher revenue and earnings than Tile Shop Hldgs. Lowe’s Companies is trading at a lower price-to-earnings ratio than Tile Shop Hldgs, indicating that it is currently the more affordable of the two stocks.

Summary

Lowe’s Companies beats Tile Shop Hldgs on 11 of the 17 factors compared between the two stocks.

Lowe’s Companies Company Profile

Lowe’s Companies, Inc. (Lowe’s) is a home improvement retailer. The Company operates approximately 1,860 home improvement and hardware stores, representing approximately 200 million square feet of retail selling space. The Company operates approximately 1,800 stores located across over 50 states in the United States, including approximately 80 Orchard Supply Hardware (Orchard) stores in California and Oregon, as well as approximately 40 stores in Canada and over 10 stores in Mexico. The Company operates through the home improvement retail operations segment. The Company offers a range of products for maintenance, repair, remodeling and decorating. The Company offers home improvement products in categories, including Lumber and Building Materials; Tools and Hardware; Appliances; Fashion Fixtures; Rough Plumbing and Electrical; Lawn and Garden; Seasonal Living; Paint; Flooring; Millwork; Kitchens; Outdoor Power Equipment, and Home Fashions.

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