Cato (NYSE:CATO) & Shoe Carnival (NASDAQ:SCVL) Critical Review

Shoe Carnival (NASDAQ:SCVL) and Cato (NYSE:CATO) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, institutional ownership and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Shoe Carnival and Cato, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shoe Carnival	0	2	0	1	2.67
Cato	1	0	0	0	1.00

Shoe Carnival currently has a consensus price target of $22.00, suggesting a potential upside of 37.84%. Given Shoe Carnival’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Shoe Carnival is more favorable than Cato.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Shoe Carnival	4.60%	7.75%	4.47%
Cato	-0.90%	-3.57%	-1.35%

Earnings and Valuation

This table compares Shoe Carnival and Cato”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shoe Carnival	$1.14 billion	0.39	$52.27 million	$1.90	8.40
Cato	$653.81 million	0.09	-$5.91 million	($0.31)	-9.18

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

Insider and Institutional Ownership

66.1% of Shoe Carnival shares are held by institutional investors. Comparatively, 61.1% of Cato shares are held by institutional investors. 35.5% of Shoe Carnival shares are held by company insiders. Comparatively, 18.1% 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 will outperform the market over the long term.

Volatility and Risk

Shoe Carnival has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500. Comparatively, Cato has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Summary

Shoe Carnival beats Cato on 14 of the 14 factors compared between the two stocks.

About Shoe Carnival

Shoe Carnival, Inc., together with its subsidiaries, operates as a family footwear retailer in the United States. The company offers range of dress, casual, work, and athletic shoes, as well as sandals and boots for men, women, and children; and various accessories. The company also operates stores, and sells its products through online shopping at shoecarnival.com, as well as through mobile app. Shoe Carnival, Inc. was founded in 1978 and is headquartered in Evansville, Indiana.

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.