Capri (NYSE:CPRI) and Cato (NYSE:CATO) Head-To-Head Analysis

Cato (NYSE:CATO) and Capri (NYSE:CPRI) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cato	-1.38%	-5.46%	-2.04%
Capri	-29.55%	-138.53%	-8.48%

Risk and Volatility

Cato has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Capri has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$660.06 million	0.09	-$18.06 million	($0.50)	-5.99
Capri	$4.44 billion	0.65	-$1.18 billion	($9.83)	-2.48

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

Analyst Ratings

This is a summary of current ratings and price targets for Cato and Capri, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	1	0	0	0	1.00
Capri	1	7	6	1	2.47

Capri has a consensus target price of $27.23, indicating a potential upside of 11.73%. Given Capri’s stronger consensus rating and higher possible upside, analysts plainly believe Capri is more favorable than Cato.

Institutional and Insider Ownership

61.1% of Cato shares are owned by institutional investors. Comparatively, 84.3% of Capri shares are owned by institutional investors. 18.1% of Cato shares are owned by insiders. Comparatively, 2.3% of Capri shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Capri beats Cato on 9 of the 15 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 Capri

Capri Holdings Limited designs, markets, distributes, and retails branded women's and men's apparel, footwear, and accessories in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia. It operates through three segments: Versace, Jimmy Choo, and Michael Kors. The company offers ready-to-wear, accessories, footwear, handbags, scarves and belts, small leather goods, eyewear, watches, jewelry, fragrances, and home furnishings through a distribution network, including boutiques, department, and specialty stores, as well as through e-commerce sites. It also engages in licensing agreements to the manufacture and sale of watches, jewelry, eyewear, and fragrances. The company was formerly known as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited in December 2018. Capri Holdings Limited was founded in 1981 and is headquartered in London, the United Kingdom.