Tapestry (NYSE:TPR) versus The Swatch Group (OTCMKTS:SWGNF) Critical Survey

Tapestry (NYSE:TPR) and The Swatch Group (OTCMKTS:SWGNF) are both consumer cyclical companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Institutional & Insider Ownership

90.8% of Tapestry shares are owned by institutional investors. Comparatively, 5.1% of The Swatch Group shares are owned by institutional investors. 0.9% of Tapestry shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Tapestry pays an annual dividend of $1.40 per share and has a dividend yield of 3.7%. The Swatch Group pays an annual dividend of $1.50 per share and has a dividend yield of 3.8%. Tapestry pays out 37.0% of its earnings in the form of a dividend. The Swatch Group pays out 22.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Swatch Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Tapestry and The Swatch Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tapestry	13.15%	39.78%	9.64%
The Swatch Group	N/A	N/A	N/A

Earnings and Valuation

This table compares Tapestry and The Swatch Group’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tapestry	$6.70 billion	1.30	$936.00 million	$3.78	10.02
The Swatch Group	N/A	N/A	N/A	$6.69	5.95

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Tapestry and The Swatch Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tapestry	0	5	10	0	2.67
The Swatch Group	0	0	0	0	N/A

Tapestry presently has a consensus target price of $47.56, suggesting a potential upside of 25.79%. Given Tapestry’s higher possible upside, equities research analysts clearly believe Tapestry is more favorable than The Swatch Group.

Summary

Tapestry beats The Swatch Group on 9 of the 12 factors compared between the two stocks.

About Tapestry

Tapestry, Inc. provides luxury accessories and branded lifestyle products in the United States, Japan, Greater China, and internationally. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman. It offers women’s handbags; and women’s accessories, such as small leather goods which includes mini and micro handbags, money pieces, wristlets, pouches, and cosmetic cases, as well as novelty accessories including address books, time management and travel accessories, sketchbooks, and portfolios; and belts, key rings, and charms. The company also provides men products, which includes bag collections, such as business cases, computer bags, messenger-style bags, backpacks, and totes; small leather goods including wallets, card cases, travel organizers, and belts; and footwear, watches, fragrances, sunglasses, novelty accessories, and ready-to-wear items. In addition, it offers other products including women’s footwear and fragrances; eyewear and sunglasses; and jewelry, such as bracelets, necklaces, rings, and earrings, watches, and other women’s seasonal lifestyle apparel collections, including outerwear, ready-to-wear and cold weather accessories, such as gloves, scarves, and hats. Further, the company provides kids items, housewares, and home accessories, such as fashion bedding and tableware, stationery, and gifts. It offers its products through e-commerce sites and concession shop-in-shops, wholesale, and third-party distributors under the Coach, Kate Spade, and Stuart Weitzman brand names. The company was formerly known as Coach, Inc. and changed its name to Tapestry, Inc. in October 2017. Tapestry, Inc. was founded in 1941 and is headquartered in New York, New York.

About The Swatch Group

The Swatch Group AG designs, manufactures, and sells finished watches, jewelry, and watch movements and components worldwide. The company operates through Watches & Jewelry and Electronic Systems segments. The Watches & Jewelry segment designs, produces, and commercializes watches and jewelry. The Electronic Systems segment engages in the design, production, and commercialization of electronic components, as well as sports timing activities. It is also involved in the provision of assembly, research and development, administration, polishing, logistics and distribution, and customer services; and hard material products, microelectronics, watch cases and crowns, miniature low-frequency quartz crystals, thin wires, miniature batteries, watch dials, watch hands, bracelets, sports timing technology and equipment, precision parts, and assembly electronic components. In addition, the company engages in retail, communication, real estate, real estate management, finance, reinsurance, and art center businesses. It offers its watch and jewelry products primarily under the Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega, Longines, Rado, Union Glashütte, Tissot, Balmain, Certina, Mido, Hamilton, Swatch, and Flik Flak brands. The Swatch Group AG was founded in 1983 and is headquartered in Biel/Bienne, Switzerland.