Financial Survey: Barnes & Noble (BKS) versus Barnes & Noble Education (BNED)

Barnes & Noble (NYSE: BKS) and Barnes & Noble Education (NYSE:BNED) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

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67.5% of Barnes & Noble shares are owned by institutional investors. Comparatively, 69.2% of Barnes & Noble Education shares are owned by institutional investors. 19.0% of Barnes & Noble shares are owned by insiders. Comparatively, 3.5% of Barnes & Noble Education shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Barnes & Noble and Barnes & Noble Education, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barnes & Noble 0 1 0 0 2.00
Barnes & Noble Education 0 0 2 0 3.00

Barnes & Noble Education has a consensus target price of $12.00, indicating a potential upside of 66.90%. Given Barnes & Noble Education’s stronger consensus rating and higher probable upside, analysts clearly believe Barnes & Noble Education is more favorable than Barnes & Noble.

Profitability

This table compares Barnes & Noble and Barnes & Noble Education’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Barnes & Noble -3.19% 6.72% 1.79%
Barnes & Noble Education -12.31% -41.88% -18.50%

Earnings and Valuation

This table compares Barnes & Noble and Barnes & Noble Education’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barnes & Noble $3.89 billion 0.10 $22.02 million $0.43 13.02
Barnes & Noble Education $1.87 billion 0.18 $5.36 million $0.11 65.36

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

Risk & Volatility

Barnes & Noble has a beta of 2.14, suggesting that its stock price is 114% more volatile than the S&P 500. Comparatively, Barnes & Noble Education has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500.

Dividends

Barnes & Noble pays an annual dividend of $0.60 per share and has a dividend yield of 10.7%. Barnes & Noble Education does not pay a dividend. Barnes & Noble pays out 139.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Barnes & Noble beats Barnes & Noble Education on 9 of the 16 factors compared between the two stocks.

About Barnes & Noble

Barnes & Noble, Inc. operates as a content and commerce company in the United States. Barnes & Noble, Inc. operates as a retailer of books, content, digital media, and educational products. It sells trade books, including hardcover and paperback titles; mass market paperbacks, such as mystery, romance, science fiction, and other fiction; and children's books, eBooks and other digital content, NOOK and related accessories, bargain books, magazines, gifts, café products and services, educational toys and games, and music and movies. The company also offers a suite of new, used, and digital textbooks, as well as textbooks rentals. As of June 22, 2017, it operated through 633 Barnes & Noble bookstores in 50 states, as well as BN.com, nook.com, and barnesandnoble.com Websites. The company was founded in 1986 and is based in New York, New York.

About Barnes & Noble Education

Barnes & Noble Education, Inc. operates bookstores for college and university campuses, and private/parochial K-12 schools in the United States. The company operates in two segments, Barnes & Noble College and MBS Textbook Exchange. The Barnes & Noble College segment sells and rents course material; offers a suite of digital content, software, and services through its LoudCloud platform, as well as etextbooks; and sells general merchandise, including collegiate and athletic apparel, other custom-branded school spirit products, technology, supplies, and convenience items. It also operates 83 customized cafés and 17 stand-alone convenience stores; and a media channel for brands targeting the college demographic. As of April 29, 2017, this segment operated 769 physical bookstores; and 61 True Spirit sites. The MBS Textbook Exchange segment is involved in the operation of virtual bookstores, which offer course materials, including new and used print and digital textbooks; and textbook distribution activities, as well as sale of inventory management, hardware, and point-of-sale software. It also provides digital suite of course materials and platforms; new, used, and digital textbooks online; and digital content. This segment operates 712 virtual bookstores, including 454 virtual stores at K-12 schools; and textbooks.com. Barnes & Noble Education, Inc. was founded in 1873 and is based in Basking Ridge, New Jersey.

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