Ascena Retail Group (ASNA) and Ross Stores (ROST) Head to Head Survey

Ascena Retail Group (NASDAQ: ASNA) and Ross Stores (NASDAQ:ROST) are both cyclical consumer goods & services companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Ascena Retail Group and Ross Stores, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ascena Retail Group 1 8 0 0 1.89
Ross Stores 0 7 15 0 2.68

Ascena Retail Group presently has a consensus target price of $2.75, indicating a potential upside of 31.58%. Ross Stores has a consensus target price of $74.53, indicating a potential downside of 10.83%. Given Ascena Retail Group’s higher possible upside, analysts plainly believe Ascena Retail Group is more favorable than Ross Stores.

Institutional & Insider Ownership

94.9% of Ascena Retail Group shares are held by institutional investors. Comparatively, 91.4% of Ross Stores shares are held by institutional investors. 8.0% of Ascena Retail Group shares are held by company insiders. Comparatively, 2.3% of Ross Stores shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Ascena Retail Group and Ross Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ascena Retail Group -16.39% 2.50% 0.64%
Ross Stores 8.93% 43.21% 21.90%

Volatility & Risk

Ascena Retail Group has a beta of 1.96, suggesting that its stock price is 96% more volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Earnings and Valuation

This table compares Ascena Retail Group and Ross Stores’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ascena Retail Group $6.65 billion 0.06 -$1.07 billion ($5.51) -0.38
Ross Stores $12.87 billion 2.48 $1.12 billion $3.13 26.70

Ross Stores has higher revenue and earnings than Ascena Retail Group. Ascena Retail Group is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 0.8%. Ascena Retail Group does not pay a dividend. Ross Stores pays out 20.4% of its earnings in the form of a dividend. Ascena Retail Group has raised its dividend for 11 consecutive years.

Summary

Ross Stores beats Ascena Retail Group on 11 of the 17 factors compared between the two stocks.

About Ascena Retail Group

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

About Ross Stores

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

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