Financial Analysis: Dillard’s (NYSE:DDS) and Seven and I (OTCMKTS:SVNDY)

Seven and I (OTCMKTS:SVNDY) and Dillard’s (NYSE:DDS) are both large-cap consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Volatility & Risk

Seven and I has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500. Comparatively, Dillard’s has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500.

Valuation and Earnings

This table compares Seven and I and Dillard’s”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Seven and I	$69.63 billion	0.44	$1.96 billion	$0.83	16.04
Dillard’s	$6.47 billion	1.55	$570.19 million	$43.65	14.76

Seven and I has higher revenue and earnings than Dillard’s. Dillard’s is trading at a lower price-to-earnings ratio than Seven and I, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Seven and I and Dillard’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Seven and I	0	2	0	0	2.00
Dillard’s	2	3	0	0	1.60

Dillard’s has a consensus target price of $545.67, indicating a potential downside of 15.29%. Given Dillard’s’ higher probable upside, analysts clearly believe Dillard’s is more favorable than Seven and I.

Dividends

Seven and I pays an annual dividend of $0.19 per share and has a dividend yield of 1.4%. Dillard’s pays an annual dividend of $1.20 per share and has a dividend yield of 0.2%. Seven and I pays out 22.9% of its earnings in the form of a dividend. Dillard’s pays out 2.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dillard’s has increased its dividend for 14 consecutive years.

Insider and Institutional Ownership

0.0% of Seven and I shares are owned by institutional investors. Comparatively, 67.2% of Dillard’s shares are owned by institutional investors. 34.8% of Dillard’s shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Seven and I and Dillard’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Seven and I	3.03%	7.87%	3.06%
Dillard’s	10.48%	31.88%	16.20%

Summary

Dillard’s beats Seven and I on 11 of the 16 factors compared between the two stocks.

About Seven and I

Seven & i Holdings Co., Ltd. operates convenience stores, superstores, department stores, supermarkets, and specialty stores. It operates through six segments: Domestic Convenience Store operations, Overseas Convenience Store Operations, Superstore Operations, Department and Specialty Store Operations, Financial Services, and Others. The company engages in the operation of convenience stores comprising directly managed corporate stores and franchised stores; retail business that provides daily life necessities, such as food and other daily necessities and dollar merchandise and services; banking, leasing, and credit card business; and real estate business. Seven & i Holdings Co., Ltd. was incorporated in 2005 and is headquartered in Tokyo, Japan.

About Dillard’s

Dillard’s, Inc. engages in the retail of fashion apparel, cosmetics, and home furnishings, and other consumer goods. It operates through the Retail Operations and Construction segments. The Retail Operations segment comprises sells cosmetics, ladies’ apparel, ladies’ accessories and lingerie, juniors’ and children’s apparel, men’s apparel and accessories, shoes, and home and furniture products. The Construction segment constructs and remodels stores through CDI Contractors, LLC. The company was founded by William Thomas Dillard in 1938 and is headquartered in Little Rock, AR.