Cato (NYSE:CATO – Get Free Report) and a.k.a. Brands (NYSE:AKA – Get Free Report) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.
Volatility & Risk
Cato has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, a.k.a. Brands has a beta of 1.64, suggesting that its stock price is 64% more volatile than the S&P 500.
Valuation and Earnings
This table compares Cato and a.k.a. Brands”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Cato | $642.95 million | 0.09 | -$18.06 million | ($1.35) | -2.09 |
| a.k.a. Brands | $574.70 million | 0.20 | -$25.99 million | ($2.51) | -4.26 |
Cato has higher revenue and earnings than a.k.a. Brands. a.k.a. Brands is trading at a lower price-to-earnings ratio than Cato, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
61.1% of Cato shares are held by institutional investors. Comparatively, 55.4% of a.k.a. Brands shares are held by institutional investors. 18.1% of Cato shares are held by company insiders. Comparatively, 17.6% of a.k.a. Brands shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares Cato and a.k.a. Brands’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cato | -4.02% | -14.71% | -5.80% |
| a.k.a. Brands | -4.48% | -21.06% | -6.33% |
Analyst Recommendations
This is a summary of current ratings and recommmendations for Cato and a.k.a. Brands, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cato | 0 | 0 | 0 | 0 | 0.00 |
| a.k.a. Brands | 0 | 1 | 1 | 0 | 2.50 |
a.k.a. Brands has a consensus target price of $20.00, suggesting a potential upside of 86.83%. Given a.k.a. Brands’ stronger consensus rating and higher probable upside, analysts clearly believe a.k.a. Brands is more favorable than Cato.
Summary
Cato beats a.k.a. Brands on 9 of the 14 factors compared between the two stocks.
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.
About a.k.a. Brands
a.k.a. Brands Holding Corp. operates a portfolio of online fashion brands in the United States, Australia, and internationally. The company offers streetwear apparel, dresses, tops, bottoms, shoes, headwear, and accessories through its online stores under the Princess Polly, Petal & Pup, Culture Kings, and mnml brands. It also operates physical stores under the Culture Kings brand. The company was founded in 2018 and is headquartered in San Francisco, California.
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