Critical Review: Brilliant Earth Group (NASDAQ:BRLT) and Luk Fook (OTCMKTS:LKFLF)

Luk Fook (OTCMKTS:LKFLF) and Brilliant Earth Group (NASDAQ:BRLT) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Profitability

This table compares Luk Fook and Brilliant Earth Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Luk Fook	N/A	N/A	N/A
Brilliant Earth Group	0.44%	-1.57%	-0.61%

Earnings & Valuation

This table compares Luk Fook and Brilliant Earth Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Luk Fook	$1.53 billion	1.26	$163.93 million	N/A	N/A
Brilliant Earth Group	$422.16 million	0.59	$540,000.00	($0.03)	-83.67

Luk Fook has higher revenue and earnings than Brilliant Earth Group.

Institutional & Insider Ownership

70.4% of Brilliant Earth Group shares are held by institutional investors. 84.5% of Brilliant Earth Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations for Luk Fook and Brilliant Earth Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Luk Fook	0	1	0	0	2.00
Brilliant Earth Group	1	3	0	0	1.75

Brilliant Earth Group has a consensus price target of $1.80, indicating a potential downside of 28.29%. Given Brilliant Earth Group’s higher possible upside, analysts clearly believe Brilliant Earth Group is more favorable than Luk Fook.

Risk and Volatility

Luk Fook has a beta of -0.38, indicating that its share price is 138% less volatile than the S&P 500. Comparatively, Brilliant Earth Group has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Summary

Luk Fook beats Brilliant Earth Group on 6 of the 11 factors compared between the two stocks.

About Luk Fook

Luk Fook Holdings (International) Limited, an investment holding company, engages in sourcing, designing, wholesaling, trademark licensing, and retailing various gold and platinum jewelry, and gem-set jewelry products. It offers ring and pair rings, necklaces, pendants, earrings, bangles and bracelets, charms, figurines, accessories, and other products of various materials comprising diamond, gold, platinum, jadeite, gemstone, pearl, and silver materials. The company also provides authentication of gemstones; gold bullion trading services; and software development and services related to internet. In addition, it wholesales polished diamonds; offers trademark licensing, brand building, promotion, and quality examination services, as well as diamond subcontracting handling and diamonds custom export services; and engages in electronic retailing of gold and jewelry products. The company was founded in 1991 and is headquartered in Sha Tin, Hong Kong.

About Brilliant Earth Group

Brilliant Earth Group, Inc. designs, procures, and sells diamonds, gemstones, and jewelry in the United States and internationally. The company’s product assortment and merchandise include a collection of diamond engagement rings, wedding and anniversary rings, gemstone rings, and fine jewelry. It sells directly to consumers through its omnichannel sales platform, including e-commerce and showrooms. Brilliant Earth Group, Inc. was founded in 2005 and is headquartered in San Francisco, California.