Financial Analysis: GAP (NYSE:GPS) and Roots (OTCMKTS:RROTF)

GAP (NYSE:GPS) and Roots (OTCMKTS:RROTF) are both consumer cyclical companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$15.00 billion	0.00	$502.00 million	$1.80	N/A
Roots	N/A	N/A	N/A	N/A	N/A

GAP has higher revenue and earnings than Roots.

Institutional & Insider Ownership

58.8% of GAP shares are owned by institutional investors. 30.8% of GAP shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares GAP and Roots’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAP	4.52%	27.57%	6.30%
Roots	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of recent ratings and price targets for GAP and Roots, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	0	7	8	0	2.53
Roots	0	0	0	0	N/A

GAP currently has a consensus target price of $27.08, indicating a potential upside of ∞. Given GAP’s higher possible upside, equities analysts plainly believe GAP is more favorable than Roots.

Summary

GAP beats Roots on 8 of the 8 factors compared between the two stocks.

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.

About Roots

Roots Corporation, together with its subsidiaries, designs, markets, and sells apparel, leather goods, footwear, and accessories under the Roots brand in Canada and internationally. The company operates through two segments, Direct-To-Consumer, and Partners and Other. The Direct-to-Consumer segment sells products through the company's corporate retail stores and ecommerce. The Partners and Other segment involved in the wholesale of Roots branded products to the company's international operating partners, licensees, and wholesale customers. Roots Corporation was founded in 1973 and is headquartered in Toronto, Canada.