Head to Head Review: Tilly’s (NYSE:TLYS) and Zalando (OTCMKTS:ZLNDY)

Zalando (OTCMKTS:ZLNDY) and Tilly’s (NYSE:TLYS) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Institutional & Insider Ownership

76.4% of Tilly’s shares are held by institutional investors. 2.8% of Tilly’s shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Zalando and Tilly’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zalando	1	1	2	1	2.60
Tilly’s	1	4	0	0	1.80

Tilly’s has a consensus price target of $2.25, suggesting a potential upside of 64.23%. Given Tilly’s’ higher possible upside, analysts plainly believe Tilly’s is more favorable than Zalando.

Profitability

This table compares Zalando and Tilly’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zalando	2.07%	8.95%	3.01%
Tilly’s	-8.28%	-48.33%	-12.92%

Valuation and Earnings

This table compares Zalando and Tilly’s”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zalando	$11.44 billion	0.62	$271.71 million	$0.52	25.82
Tilly’s	$549.60 million	0.08	-$46.23 million	($1.52)	-0.90

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

Risk and Volatility

Zalando has a beta of 1.57, suggesting that its share price is 57% more volatile than the S&P 500. Comparatively, Tilly’s has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Summary

Zalando beats Tilly’s on 12 of the 15 factors compared between the two stocks.

About Zalando

Zalando SE operates an online platform for fashion and lifestyle products. The company operates through Fashion Store and Offprice segments. It provides shoes, apparel, accessories, and beauty products with free delivery and returns, as well as various payment options. The company also sells its products through Lounge by Zalando; and brick-and-mortar outlet stores. It operates in Germany, Austria, Switzerland, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, France, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The company was founded in 2008 and is headquartered in Berlin, Germany.

About Tilly’s

Tilly’s, Inc. engages in the retail of casual apparel, footwear, and accessories. Its stores are located in retail centers, including malls, lifestyle centers, power centers, community centers, outlet centers, and street-front locations. The company was founded by Hezy Shaked and Tilly Levine in 1982 and is headquartered in Irvine, CA.