Financial Survey: Fast Retailing (OTCMKTS:FRCOY) & GAP (NYSE:GPS)

Fast Retailing (OTCMKTS:FRCOY) and GAP (NYSE:GPS) are both consumer cyclical companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Institutional and Insider Ownership

0.0% of Fast Retailing shares are owned by institutional investors. Comparatively, 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, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Fast Retailing and GAP, as reported by MarketBeat.

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

GAP has a consensus price target of $27.08, suggesting a potential upside of ∞. Given GAP’s higher probable upside, analysts plainly believe GAP is more favorable than Fast Retailing.

Profitability

This table compares Fast Retailing and GAP’s net margins, return on equity and return on assets.

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

Dividends

Fast Retailing pays an annual dividend of $0.15 per share and has a dividend yield of 0.5%. GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.4%. Fast Retailing pays out 0.2% of its earnings in the form of a dividend. GAP pays out 33.3% 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.

Valuation & Earnings

This table compares Fast Retailing and GAP”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fast Retailing	N/A	N/A	N/A	$99.47	0.31
GAP	$15.00 billion	0.61	$502.00 million	$1.80	13.64

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

Summary

GAP beats Fast Retailing on 10 of the 12 factors compared between the two stocks.

About Fast Retailing

Fast Retailing Co., Ltd., through its subsidiaries, operates as an apparel designer and retailer in Japan and internationally. The company operates through UNIQLO Japan, UNIQLO International, GU, and Global Brands segments. It manufactures and retails clothing for men, women, children, and babies, as well as offers shoes and other goods and items. The company operates stores and franchises under the UNIQLO, GU, PLST, Theory, COMPTOIR DES COTONNIERS, J Brand, and PRINCESSE TAM.TAM brand names. It also sells its products through online; and provides real estate leasing services. The company was formerly known as Ogori Shoji Co., Ltd. and changed its name to Fast Retailing Co., Ltd. in September 1991. Fast Retailing Co., Ltd. was founded in 1949 and is headquartered in Yamaguchi, Japan.

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.