Contrasting Sportsman’s Warehouse (NASDAQ:SPWH) and Cato (NYSE:CATO)

Sportsman’s Warehouse (NASDAQ:SPWH) and Cato (NYSE:CATO) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Risk and Volatility

Sportsman’s Warehouse has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, Cato has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Valuation and Earnings

This table compares Sportsman’s Warehouse and Cato”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sportsman’s Warehouse	$1.20 billion	0.11	-$33.06 million	($0.96)	-3.67
Cato	$649.81 million	0.09	-$18.06 million	($1.35)	-2.18

Cato has lower revenue, but higher earnings than Sportsman’s Warehouse. Sportsman’s Warehouse is trading at a lower price-to-earnings ratio than Cato, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sportsman’s Warehouse and Cato’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sportsman’s Warehouse	-3.01%	-7.65%	-1.96%
Cato	-4.02%	-14.71%	-5.80%

Analyst Ratings

This is a breakdown of recent recommendations for Sportsman’s Warehouse and Cato, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sportsman’s Warehouse	0	1	5	0	2.83
Cato	0	0	0	0	0.00

Sportsman’s Warehouse currently has a consensus price target of $3.2083, suggesting a potential downside of 8.85%. Given Sportsman’s Warehouse’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Sportsman’s Warehouse is more favorable than Cato.

Institutional and Insider Ownership

83.0% of Sportsman’s Warehouse shares are held by institutional investors. Comparatively, 61.1% of Cato shares are held by institutional investors. 1.8% of Sportsman’s Warehouse shares are held by company insiders. Comparatively, 16.6% of Cato 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.

Summary

Sportsman’s Warehouse beats Cato on 10 of the 14 factors compared between the two stocks.

About Sportsman’s Warehouse

Sportsman’s Warehouse Holdings, Inc. engages in the retail of sporting and athletic goods. Its products include hunting and shooting, archery, fishing, camping, boating accessories, optics and electronics, knives and tools, and footwear. The company was founded in 1986 and is headquartered in West Jordan, UT.

About Cato

The Cato Corporation, together with its subsidiaries, operates as a specialty retailer of fashion apparel and accessories primarily in the southeastern United States. It operates through two segments, Retail and Credit. The company's stores and e-commerce websites offer a range of apparel and accessories, including dressy, career, and casual sportswear; and dresses, coats, shoes, lingerie, costume jewelry, and handbags, as well as men's wear, and lines for kids and infants. It operates its stores and e-commerce websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. It also provides credit card services to its customers, as well as layaway plans for customers. The Cato Corporation was incorporated in 1946 and is headquartered in Charlotte, North Carolina.