Critical Analysis: Culp (NYSE:CULP) versus Fossil Group (NASDAQ:FOSL)

Fossil Group (NASDAQ:FOSL) and Culp (NYSE:CULP) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.

Valuation and Earnings

This table compares Fossil Group and Culp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fossil Group	$1.00 billion	0.28	-$78.30 million	($1.28)	-3.70
Culp	$206.76 million	0.23	-$19.10 million	($0.32)	-11.72

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

Volatility & Risk

Fossil Group has a beta of 1.61, meaning that its share price is 61% more volatile than the S&P 500. Comparatively, Culp has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Fossil Group and Culp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fossil Group	1	1	2	1	2.60
Culp	1	1	0	0	1.50

Fossil Group presently has a consensus target price of $9.00, suggesting a potential upside of 90.27%. Given Fossil Group’s stronger consensus rating and higher probable upside, research analysts clearly believe Fossil Group is more favorable than Culp.

Profitability

This table compares Fossil Group and Culp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fossil Group	-7.09%	-59.76%	-7.53%
Culp	-5.24%	-12.53%	-5.70%

Institutional & Insider Ownership

61.1% of Fossil Group shares are owned by institutional investors. Comparatively, 75.1% of Culp shares are owned by institutional investors. 3.8% of Fossil Group shares are owned by insiders. Comparatively, 7.9% of Culp 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.

Summary

Fossil Group beats Culp on 8 of the 15 factors compared between the two stocks.

About Fossil Group

Fossil Group, Inc., together with its subsidiaries, designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. The company’s products include traditional watches, smartwatches, jewelry, handbags, small leather goods, belts, and sunglasses. It also manufactures and distributes private label brands, as well as branded products purchased for resell in other branded retail stores. The company offers its products under its proprietary brands, such as FOSSIL, SKAGEN, MICHELE, RELIC, and ZODIAC; and under the licensed brands, including ARMANI EXCHANGE, DIESEL, DKNY, EMPORIO ARMANI, KATE SPADE NEW YORK, MICHAEL KORS, TORY BURCH, and Skechers. The company sells its products through company-owned retail and outlet stores, department and specialty retail stores, mass market stores, e-commerce sites, licensed and franchised FOSSIL retail stores, and retail concessions, as well as sells its products on airlines. The company was formerly known as Fossil, Inc. and changed its name to Fossil Group, Inc. in May 2013. Fossil Group, Inc. was founded in 1984 and is headquartered in Richardson, Texas.

About Culp

Culp, Inc. manufactures, sources, markets, and sells mattress fabrics, sewn covers, and cut and sewn kits for use in mattresses, foundations, and other bedding products in the United States, North America, the Far East, Asia, and internationally. It operates in two segments, Mattress Fabrics and Upholstery Fabrics. The Mattress Fabrics segment offers woven jacquard, knitted, and converted fabrics for use in the production of bedding products, including mattresses, box springs, foundations, and top of bed components. The Upholstery Fabrics segment provides jacquard woven fabrics, velvets, micro denier suedes, woven dobbies, knitted fabrics, piece-dyed woven products, and polyurethane fabrics for use in the production of residential and commercial upholstered furniture, such as sofas, recliners, loveseats, chairs, sectionals, and sofa-beds, as well as office seating and window treatment products; and installation services for customers in the hospitality and commercial industries. Culp, Inc. was incorporated in 1972 and is headquartered in High Point, North Carolina.