Critical Comparison: GrowGeneration (NASDAQ:GRWG) & Citi Trends (NASDAQ:CTRN)

Citi Trends (NASDAQ:CTRN) and GrowGeneration (NASDAQ:GRWG) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.

Institutional & Insider Ownership

36.0% of GrowGeneration shares are owned by institutional investors. 9.6% of Citi Trends shares are owned by company insiders. Comparatively, 8.1% of GrowGeneration shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Citi Trends and GrowGeneration, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Citi Trends	0	1	2	0	2.67
GrowGeneration	1	1	1	0	2.00

Citi Trends currently has a consensus target price of $81.00, suggesting a potential upside of 63.11%. GrowGeneration has a consensus target price of $2.50, suggesting a potential upside of 66.67%. Given GrowGeneration’s higher probable upside, analysts plainly believe GrowGeneration is more favorable than Citi Trends.

Profitability

This table compares Citi Trends and GrowGeneration’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Citi Trends	0.84%	8.11%	2.00%
GrowGeneration	-10.07%	-17.44%	-11.52%

Valuation & Earnings

This table compares Citi Trends and GrowGeneration”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Citi Trends	$869.97 million	0.48	$5.21 million	$0.82	60.56
GrowGeneration	$161.74 million	0.55	-$24.05 million	($0.27)	-5.56

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

Risk and Volatility

Citi Trends has a beta of 1.85, meaning that its stock price is 85% more volatile than the S&P 500. Comparatively, GrowGeneration has a beta of 2.54, meaning that its stock price is 154% more volatile than the S&P 500.

Summary

Citi Trends beats GrowGeneration on 10 of the 14 factors compared between the two stocks.

About Citi Trends

Citi Trends, Inc. operates as a value retailer of fashion apparel, accessories, and home goods. The company offers apparel, such as fashion sportswear and footwear for men and ladies, as well as apparel for kids, including newborns, infants, toddlers, boys, and girls; sleepwear, lingerie, and scrubs for ladies; and kids uniforms and accessories. It also provides accessories and beauty products that include handbags, luggage, hats, belts, sunglasses, jewelry, and watches, as well as offers outerwear for men and women. In addition, the company offers home and lifestyle products comprising home products for the bedroom, bathroom, kitchen, and decorative accessories; and food, tech, team sports, health and products, as well as seasonal items, books, and toys. Citi Trends, Inc. provides its products primarily to African American and multicultural families in the United States. The company was formerly known as Allied Fashion, Inc. and changed its name to Citi Trends, Inc. in 2001. Citi Trends, Inc. was founded in 1946 and is headquartered in Savannah, Georgia.

About GrowGeneration

GrowGeneration Corp., through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. The company engages in the marketing and distribution of nutrients, additives, growing media, lighting, and environmental control systems, as well as other indoor and outdoor growing products. It operates a chain of stores in California, Colorado, Michigan, Maine, Oklahoma, Oregon, Washington, Montana, New York, Ohio, Mississippi, Missouri, Arizona, Rhode Island, Florida, Massachusetts, Virginia, New Jersey, and New Mexico, as well as growgeneration.com, an online superstore for cultivators, a wholesale business for resellers, HRG Distribution, and benching, racking, and storage solutions and MMI. The company was formerly known as Easylife Corp. GrowGeneration Corp. was founded in 2008 and is based in Greenwood Village, Colorado.