Head to Head Review: Macy’s (NYSE:M) versus Groupon (NASDAQ:GRPN)

Macy’s (NYSE:M) and Groupon (NASDAQ:GRPN) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, analyst recommendations, valuation, profitability, earnings and dividends.

Profitability

This table compares Macy’s and Groupon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Macy’s	3.29%	13.21%	3.83%
Groupon	-25.26%	N/A	-20.28%

Risk & Volatility

Macy’s has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Groupon has a beta of 0.24, meaning that its stock price is 76% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Macy’s and Groupon, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Macy’s	2	8	2	1	2.15
Groupon	2	1	1	0	1.75

Macy’s currently has a consensus price target of $22.78, indicating a potential upside of 0.54%. Groupon has a consensus price target of $26.00, indicating a potential upside of 36.05%. Given Groupon’s higher probable upside, analysts clearly believe Groupon is more favorable than Macy’s.

Valuation & Earnings

This table compares Macy’s and Groupon”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Macy’s	$22.78 billion	0.26	$642.00 million	$2.73	8.30
Groupon	$498.42 million	1.56	-$83.52 million	($3.11)	-6.14

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

Institutional & Insider Ownership

87.4% of Macy’s shares are owned by institutional investors. Comparatively, 90.0% of Groupon shares are owned by institutional investors. 1.1% of Macy’s shares are owned by insiders. Comparatively, 36.6% of Groupon shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Macy’s beats Groupon on 11 of the 15 factors compared between the two stocks.

About Macy’s

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. The firm’s brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland H. Macy in 1858 and is headquartered in New York, NY.

About Groupon

Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.