ARKO (NASDAQ:ARKO) versus GAP (NYSE:GAP) Head-To-Head Comparison

GAP (NYSE:GAP) and ARKO (NASDAQ:ARKO) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Volatility & Risk

GAP has a beta of 2.08, indicating that its stock price is 108% more volatile than the S&P 500. Comparatively, ARKO has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Dividends

GAP pays an annual dividend of $0.70 per share and has a dividend yield of 3.4%. ARKO pays an annual dividend of $0.12 per share and has a dividend yield of 2.8%. GAP pays out 20.9% of its earnings in the form of a dividend. ARKO pays out 171.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GAP has increased its dividend for 1 consecutive years. GAP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations for GAP and ARKO, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	1	11	5	2	2.42
ARKO	1	1	1	0	2.00

GAP presently has a consensus target price of $27.07, suggesting a potential upside of 31.85%. ARKO has a consensus target price of $14.50, suggesting a potential upside of 243.60%. Given ARKO’s higher possible upside, analysts clearly believe ARKO is more favorable than GAP.

Earnings & Valuation

This table compares GAP and ARKO”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$15.37 billion	0.47	$816.00 million	$3.35	6.13
ARKO	$7.64 billion	0.06	$22.74 million	$0.07	60.29

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

Profitability

This table compares GAP and ARKO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAP	8.14%	19.72%	5.94%
ARKO	0.19%	4.02%	0.41%

Institutional & Insider Ownership

58.8% of GAP shares are held by institutional investors. Comparatively, 78.3% of ARKO shares are held by institutional investors. 31.0% of GAP shares are held by company insiders. Comparatively, 21.9% of ARKO shares are held by company 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 ARKO on 15 of the 18 factors compared between the two stocks.

About GAP

Gap, Inc. operates as a global apparel retail company, which offers clothing, apparel, accessories, and personal care products for men, women, and children. The firm operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Other. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The company founded by Donald G. Fisher and Doris F. Fisher in July 1969 and is headquartered in San Francisco, CA.

About ARKO

Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.