L Brands (NYSE:LB) and Chipotle Mexican Grill (NYSE:CMG) are both large-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.
Analyst Ratings
This is a summary of recent ratings and target prices for L Brands and Chipotle Mexican Grill, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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L Brands | 2 | 13 | 10 | 0 | 2.32 |
Chipotle Mexican Grill | 0 | 13 | 19 | 0 | 2.59 |
L Brands presently has a consensus price target of $39.68, indicating a potential downside of 12.37%. Chipotle Mexican Grill has a consensus price target of $1,375.7931, indicating a potential downside of 7.92%. Given Chipotle Mexican Grill's stronger consensus rating and higher probable upside, analysts clearly believe Chipotle Mexican Grill is more favorable than L Brands.
Insider & Institutional Ownership
76.1% of L Brands shares are owned by institutional investors. Comparatively, 90.0% of Chipotle Mexican Grill shares are owned by institutional investors. 17.8% of L Brands shares are owned by company insiders. Comparatively, 1.0% of Chipotle Mexican Grill shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares L Brands and Chipotle Mexican Grill's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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L Brands | $12.91 billion | 0.98 | $-366,000,000.00 | $2.29 | 19.77 |
Chipotle Mexican Grill | $5.59 billion | 7.48 | $350.16 million | $14.05 | 106.35 |
Chipotle Mexican Grill has lower revenue, but higher earnings than L Brands. L Brands is trading at a lower price-to-earnings ratio than Chipotle Mexican Grill, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
L Brands has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500. Comparatively, Chipotle Mexican Grill has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500.
Profitability
This table compares L Brands and Chipotle Mexican Grill's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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L Brands | -1.77% | -37.40% | 6.13% |
Chipotle Mexican Grill | 4.08% | 16.70% | 5.38% |
Summary
Chipotle Mexican Grill beats L Brands on 10 of the 14 factors compared between the two stocks.