Reviewing GAP (NYSE:GPS) and Roots (OTCMKTS:RROTF)

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

Analyst Ratings

This is a summary of recent recommendations for GAP and Roots, as provided 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 presently has a consensus target price of $27.08, suggesting a potential upside of ∞. Given GAP’s higher possible upside, equities analysts clearly believe GAP is more favorable than Roots.

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

Valuation & Earnings

This table compares GAP and Roots”s top-line revenue, earnings per share (EPS) 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.

Insider and Institutional Ownership

58.8% of GAP shares are held by institutional investors. 30.8% of GAP shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

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.