Critical Analysis: Revolve Group (NYSE:RVLV) versus Winmark (NASDAQ:WINA)

Revolve Group (NYSE:RVLV) and Winmark (NASDAQ:WINA) are both small-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Revolve Group and Winmark, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Revolve Group	0	6	7	0	2.54
Winmark	0	1	0	0	2.00

Revolve Group presently has a consensus price target of $30.08, suggesting a potential upside of 42.86%. Given Revolve Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Revolve Group is more favorable than Winmark.

Earnings & Valuation

This table compares Revolve Group and Winmark”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Revolve Group	$1.23 billion	1.22	$61.71 million	$1.01	20.85
Winmark	$86.53 million	11.98	$41.65 million	$11.02	26.20

Revolve Group has higher revenue and earnings than Winmark. Revolve Group is trading at a lower price-to-earnings ratio than Winmark, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Revolve Group and Winmark’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Revolve Group	5.54%	13.38%	8.71%
Winmark	47.09%	-99.47%	103.54%

Insider & Institutional Ownership

67.6% of Revolve Group shares are owned by institutional investors. Comparatively, 73.3% of Winmark shares are owned by institutional investors. 42.7% of Revolve Group shares are owned by insiders. Comparatively, 10.4% of Winmark shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Revolve Group has a beta of 1.61, suggesting that its stock price is 61% more volatile than the S&P 500. Comparatively, Winmark has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Summary

Revolve Group beats Winmark on 8 of the 14 factors compared between the two stocks.

About Revolve Group

Revolve Group, Inc. operates as an online fashion retailer for millennial and generation z consumers in the United States and internationally. The company operates in two segments, REVOLVE and FWRD. It operates a platform that connects consumers and global fashion influencers, as well as emerging, established, and owned brands. The company offers apparel, footwear, accessories, beauty, and home products from emerging, established, and owned brands, as well as luxury brands through its websites and mobile apps. The company was formerly known as Advance Holdings, LLC and changed its name to Revolve Group, Inc. in October 2018. Revolve Group, Inc. was founded in 2003 and is headquartered in Cerritos, California.

About Winmark

Winmark Corporation, a resale company operates as a franchisor for small business in the United States and Canada. The company franchises retail stores concepts that buy, sell and trade merchandise. It also operates middle-market equipment leasing business. In addition, the company buys and sells used clothing and accessories geared toward the teenage and young adult market under Plato’s Closet brand; and operates stores which buys and sells used and new children’s clothing, toys, furniture, equipment, and accessories primarily to parents of children ages infant to 12 years under the Once Upon A Child brand. Further, it buys, sells, trades in, and used and new sporting goods, equipment, and accessories for various athletic activities including team sports, such as baseball/softball, hockey, football, lacrosse, and soccer, as well as fitness, ski/snowboard, golf, and others under the Play It Again Sports brand; and buys and sells used women’s apparel, shoes, and accessories under the Style Encore brand. Additionally, the company buys, sells, trades in, and used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories under the Music Go Round brand. Winmark Corporation was incorporated in 1988 and is headquartered in Minneapolis, Minnesota.