Financial Analysis: Li Ning (OTCMKTS:LNNGY) versus Ulta Beauty (NASDAQ:ULTA)

Li Ning (OTCMKTS:LNNGY) and Ulta Beauty (NASDAQ:ULTA) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.

Risk & Volatility

Li Ning has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Ulta Beauty has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.

Profitability

This table compares Li Ning and Ulta Beauty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Li Ning	N/A	N/A	N/A
Ulta Beauty	9.34%	45.40%	17.37%

Institutional and Insider Ownership

90.4% of Ulta Beauty shares are held by institutional investors. 0.2% of Ulta Beauty shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Li Ning and Ulta Beauty”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Li Ning	$4.12 billion	1.10	$408.36 million	N/A	N/A
Ulta Beauty	$12.96 billion	1.82	$1.15 billion	$27.44	20.14

Ulta Beauty has higher revenue and earnings than Li Ning.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Li Ning and Ulta Beauty, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Li Ning	1	0	0	1	2.50
Ulta Beauty	1	6	19	1	2.74

Ulta Beauty has a consensus target price of $626.59, indicating a potential upside of 13.36%. Given Ulta Beauty’s stronger consensus rating and higher probable upside, analysts clearly believe Ulta Beauty is more favorable than Li Ning.

Summary

Ulta Beauty beats Li Ning on 12 of the 12 factors compared between the two stocks.

About Li Ning

Li Ning Company Limited, a sports brand company, engages in the research and development, design, manufacture, marketing, distribution, and retail of sporting goods in the People’s Republic of China. The company offers sporting goods, including professional and leisure footwear, apparel, equipment, and accessories under the LI-NING brand. It also develops, manufactures, markets, distributes, and/or sells outdoor sports products under the AIGLE brand; table tennis products under the Double Happiness brand name; fashionable fitness products for dance and yoga under the Danskin brand; and badminton products under the Kason brand name. The company also provides brand licensing, administrative, and property management services. It operates conventional stores, flagship stores, China LI-NING stores, LI-NING 1990 stores, factory outlets, and multi-brand stores under the LI-NING brand. The company was founded in 1990 and is headquartered in Beijing, the People’s Republic of China.

About Ulta Beauty

Ulta Beauty, Inc. operates as a specialty beauty retailer in the United States. The company offers branded and private label beauty products, including cosmetics, fragrance, haircare, skincare, bath and body products, professional hair products, and salon styling tools through its Ulta Beauty stores, shop-in-shops, Ulta.com website, and its mobile applications. It also offers beauty services, including hair, makeup, brow, and skin services at its stores. The company was formerly known as ULTA Salon, Cosmetics & Fragrance, Inc. and changed its name to Ulta Beauty, Inc. in January 2017. Ulta Beauty, Inc. was incorporated in 1990 and is based in Bolingbrook, Illinois.