Head to Head Comparison: GAP (NYSE:GAP) & Citi Trends (NASDAQ:CTRN)

Citi Trends (NASDAQ:CTRN) and GAP (NYSE:GAP) are both consumer cyclical companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Citi Trends and GAP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Citi Trends	0	1	2	0	2.67
GAP	0	2	0	0	2.00

Citi Trends currently has a consensus target price of $23.00, indicating a potential upside of 25.55%. GAP has a consensus target price of $27.00, indicating a potential upside of 30.81%. Given GAP’s higher probable upside, analysts clearly believe GAP is more favorable than Citi Trends.

Earnings and Valuation

This table compares Citi Trends and GAP”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Citi Trends	$757.54 million	0.21	-$11.98 million	($1.08)	-17.02
GAP	$15.17 billion	0.51	$502.00 million	($27.20)	-0.76

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

Risk & Volatility

Citi Trends has a beta of 2.39, meaning that its share price is 139% more volatile than the S&P 500. Comparatively, GAP has a beta of 2.35, meaning that its share price is 135% more volatile than the S&P 500.

Profitability

This table compares Citi Trends and GAP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Citi Trends	-2.92%	-12.25%	-3.77%
GAP	5.05%	28.89%	6.92%

Dividends

Citi Trends pays an annual dividend of $0.32 per share and has a dividend yield of 1.7%. GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.9%. Citi Trends pays out -29.6% of its earnings in the form of a dividend. GAP pays out -2.2% 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.

Summary

GAP beats Citi Trends on 9 of the 14 factors compared between the two stocks.

About Citi Trends

Citi Trends, Inc. operates as a value retailer of fashion apparel, accessories, and home goods. The company offers apparel, such as fashion sportswear and footwear for men and ladies, as well as apparel for kids, including newborns, infants, toddlers, boys, and girls; sleepwear, lingerie, and scrubs for ladies; and kids uniforms and accessories. It also provides accessories and beauty products that include handbags, luggage, hats, belts, sunglasses, jewelry, and watches, as well as offers outerwear for men and women. In addition, the company offers home and lifestyle products comprising home products for the bedroom, bathroom, kitchen, and decorative accessories; and food, tech, team sports, health and products, as well as seasonal items, books, and toys. Citi Trends, Inc. provides its products primarily to African American and multicultural families in the United States. The company was formerly known as Allied Fashion, Inc. and changed its name to Citi Trends, Inc. in 2001. Citi Trends, Inc. was founded in 1946 and is headquartered in Savannah, Georgia.

About GAP

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.