Critical Analysis: Clarus (NASDAQ:CLAR) & Leatt (OTCMKTS:LEAT)

Clarus (NASDAQ:CLAR) and Leatt (OTCMKTS:LEAT) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Analyst Ratings

This is a summary of recent ratings for Clarus and Leatt, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Clarus	1	2	2	0	2.20
Leatt	0	0	0	0	0.00

Clarus currently has a consensus target price of $4.75, suggesting a potential upside of 44.38%. Given Clarus’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Clarus is more favorable than Leatt.

Institutional and Insider Ownership

90.3% of Clarus shares are held by institutional investors. Comparatively, 0.6% of Leatt shares are held by institutional investors. 22.3% of Clarus shares are held by company insiders. Comparatively, 80.0% of Leatt shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Clarus and Leatt”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Clarus	$264.32 million	0.48	-$52.29 million	($2.11)	-1.56
Leatt	$44.03 million	1.31	-$2.20 million	$0.36	25.58

Leatt has lower revenue, but higher earnings than Clarus. Clarus is trading at a lower price-to-earnings ratio than Leatt, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Clarus has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500. Comparatively, Leatt has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Profitability

This table compares Clarus and Leatt’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Clarus	-31.52%	-4.30%	-3.40%
Leatt	4.12%	5.87%	4.97%

Summary

Leatt beats Clarus on 8 of the 14 factors compared between the two stocks.

About Clarus

Clarus Corporation designs, develops, manufactures, and distributes outdoor equipment and lifestyle products in the United States and internationally. The company operates through two segments, Outdoor and Adventure. The Outdoor segment offers apparels, such as shells, insulation, midlayers, pants, and logowear; rock-climbing footwear and equipment, including carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gears; technical backpacks and day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skis, ski poles, ski skins, avalanche airbag systems, avalanche transceivers, shovels, and probes. This segment offers its products for climbing, mountaineering, trail running, backpacking, skiing, and other outdoor recreation activities under the Black Diamond Equipment and PIEPS brands. The Adventure segment offers engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards, and accessories under the Rhino-Rack brand; and overlanding and off-road vehicle recovery and extraction tracks for the overland and the off-road market under the MAXTRAX brand, as well as sells and retails overlanding and off-road vehicle under the TRED brand. It markets and distributes its products through independent specialty stores and specialty chains, sporting goods and outdoor recreation stores, distributors, and original equipment manufacturers; and independent distributors, as well as through its websites. The company was formerly known as Black Diamond, Inc. and changed its name to Clarus Corporation in August 2017. The company was founded in 1957 and is headquartered in Salt Lake City, Utah.

About Leatt

Leatt Corporation designs, develops, markets, and distributes personal protective equipment for participants of motor sports and leisure activities worldwide. The company offers Leatt-Brace system, an injection molded neck protection system designed to prevent injuries to the cervical spine and neck. It also provides helmets for head and brain protection; and body armor products, including chest protectors, full upper body protectors, upper body protection vests, back protectors, knee braces, knee and elbow guards, off-road motorcycle boots, and mountain biking shoes. In addition, the company offers other products, parts, and accessories, such as goggles; toolbelt, duffel, gear, helmet bags, hats, and hydration kits; casual clothing, caps, and sunglasses; and apparel that comprises suits, jackets, jerseys, pants, shorts, socks, and gloves, as well as aftermarket support products. Further, it acts as the original equipment manufacturer for personal protective equipment sold by other brands. The company's products are used by riders of motorcycles, bicycles, snowmobiles, and ATVs. It sells its products to customers through a network of distributors and retailers; and direct to end consumers through digital channels and online store at leatt.com. The company was formerly known as Treadzone, Inc. and changed its name to Leatt Corporation in May 2005. The company was founded in 2001 and is headquartered in Durbanville, South Africa.