Head to Head Survey: Cato (NYSE:CATO) and Zalando (OTCMKTS:ZLNDY)

Cato (NYSE:CATO) and Zalando (OTCMKTS:ZLNDY) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Cato and Zalando, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	0	0	0	0	0.00
Zalando	1	1	2	1	2.60

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cato	-2.93%	-11.23%	-4.33%
Zalando	2.49%	10.19%	3.37%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$649.81 million	0.13	-$18.06 million	($1.01)	-4.38
Zalando	$11.44 billion	0.67	$271.71 million	$0.57	25.32

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

Institutional and Insider Ownership

61.1% of Cato shares are owned by institutional investors. 16.6% of Cato 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.

Risk & Volatility

Cato has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Zalando has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500.

Summary

Zalando beats Cato on 12 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 Zalando

Zalando SE operates an online platform for fashion and lifestyle products. The company operates through Fashion Store and Offprice segments. It provides shoes, apparel, accessories, and beauty products with free delivery and returns, as well as various payment options. The company also sells its products through Lounge by Zalando; and brick-and-mortar outlet stores. It operates in Germany, Austria, Switzerland, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, France, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The company was founded in 2008 and is headquartered in Berlin, Germany.