Winmark (NASDAQ:WINA) & Arhaus (NASDAQ:ARHS) Critical Analysis

Winmark (NASDAQ:WINA) and Arhaus (NASDAQ:ARHS) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Institutional & Insider Ownership

73.3% of Winmark shares are held by institutional investors. Comparatively, 27.9% of Arhaus shares are held by institutional investors. 10.4% of Winmark shares are held by insiders. Comparatively, 1.2% of Arhaus shares are held by 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.

Earnings and Valuation

This table compares Winmark and Arhaus”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Winmark	$86.06 million	11.39	$41.65 million	$11.21	24.57
Arhaus	$1.38 billion	1.54	$67.26 million	$0.46	32.65

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

Analyst Ratings

This is a summary of current recommendations and price targets for Winmark and Arhaus, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Winmark	0	1	0	0	2.00
Arhaus	0	3	6	1	2.80

Arhaus has a consensus target price of $12.00, suggesting a potential downside of 20.11%. Given Arhaus’ stronger consensus rating and higher probable upside, analysts clearly believe Arhaus is more favorable than Winmark.

Volatility and Risk

Winmark has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, Arhaus has a beta of 2.24, suggesting that its share price is 124% more volatile than the S&P 500.

Profitability

This table compares Winmark and Arhaus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Winmark	45.13%	-94.74%	111.43%
Arhaus	4.91%	17.23%	4.94%

Summary

Arhaus beats Winmark on 9 of the 15 factors compared between the two stocks.

About Winmark

Winmark Corporation, a resale company operates as a franchisor for small business in the United States and Canada. The company franchises retail stores concepts that buy, sell and trade merchandise. It also operates middle-market equipment leasing business. In addition, the company buys and sells used clothing and accessories geared toward the teenage and young adult market under Plato’s Closet brand; and operates stores which buys and sells used and new children’s clothing, toys, furniture, equipment, and accessories primarily to parents of children ages infant to 12 years under the Once Upon A Child brand. Further, it buys, sells, trades in, and used and new sporting goods, equipment, and accessories for various athletic activities including team sports, such as baseball/softball, hockey, football, lacrosse, and soccer, as well as fitness, ski/snowboard, golf, and others under the Play It Again Sports brand; and buys and sells used women’s apparel, shoes, and accessories under the Style Encore brand. Additionally, the company buys, sells, trades in, and used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories under the Music Go Round brand. Winmark Corporation was incorporated in 1988 and is headquartered in Minneapolis, Minnesota.

About Arhaus

Arhaus, Inc. operates as a lifestyle brand and premium retailer in the home furnishings market in the United States. It provides merchandise assortments across various categories, including furniture, lighting, textiles, décor, and outdoor. The company's furniture products comprise bedroom, dining room, living room, and home office furnishings, which includes sofas, dining tables and chairs, accent chairs, console and coffee tables, beds, headboards, dressers, desks, bookcases, modular storage, and other items; and outdoor products, such as outdoor dining tables, chairs, chaises and other furniture, lighting, textiles, décor, umbrellas, and fire pits. It offers lighting products, including various distinct and artistic lighting fixtures comprising chandeliers, pendants, table and floor lamps, and sconces; textile products, such as handcrafted indoor and outdoor rugs, bed linens, and pillows and throws; and décor products, including various wall art to mirrors, vases to candles, and other decorative accessories. The company distributes its products through an omni-channel model comprising showrooms, e-commerce platform, print and digital media, and in-home designer services. Arhaus, Inc. was founded in 1986 and is headquartered in Boston Heights, Ohio.