Financial Comparison: Carter’s (NYSE:CRI) versus Caleres (NYSE:CAL)

Caleres (NYSE:CAL) and Carter’s (NYSE:CRI) are both small-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Insider and Institutional Ownership

98.4% of Caleres shares are held by institutional investors. 4.1% of Caleres shares are held by insiders. Comparatively, 2.0% of Carter’s shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Caleres and Carter’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Caleres	2	1	0	0	1.33
Carter’s	3	3	0	0	1.50

Caleres presently has a consensus target price of $14.00, indicating a potential upside of 9.34%. Carter’s has a consensus target price of $30.50, indicating a potential downside of 4.19%. Given Caleres’ higher probable upside, equities analysts plainly believe Caleres is more favorable than Carter’s.

Volatility & Risk

Caleres has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Carter’s has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Dividends

Caleres pays an annual dividend of $0.28 per share and has a dividend yield of 2.2%. Carter’s pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. Caleres pays out 16.0% of its earnings in the form of a dividend. Carter’s pays out 26.5% 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.

Earnings & Valuation

This table compares Caleres and Carter’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Caleres	$2.65 billion	0.16	$107.25 million	$1.75	7.32
Carter’s	$2.84 billion	0.41	$185.51 million	$3.77	8.44

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

Profitability

This table compares Caleres and Carter’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Caleres	2.26%	11.91%	3.68%
Carter’s	4.79%	20.68%	7.29%

Summary

Carter’s beats Caleres on 10 of the 15 factors compared between the two stocks.

About Caleres

Caleres, Inc. engages in the retail and wholesale of footwear business in the United States, Canada, East Asia, and internationally. It operates through Famous Footwear and Brand Portfolio segments. The company offers licensed, branded, and private-label athletic, casual, and dress footwear products. The company provides brand name athletic, casual, and dress shoes, including Nike, Skechers, adidas, Vans, Crocs, Converse, Puma, Birkenstock, New Balance, Under Armour, Dr. Martens, Asics, Timberland, Bearpaw, Skechers, HeyDude, Franco Sarto, Rykä, Vince, Bzees, Veronica Beard, and Zodiac brands, as well as company-owned and licensed brands, such as LifeStride, Dr. Scholl’s Shoes, Blowfish Malibu, and Naturalizer. The company also operates naturalizer.com, naturalizer.ca, vionicshoes.com, samedelman.com, samedelman.co.uk, allenedmonds.com, allenedmonds.ca, drschollsshoes.com, lifestride.com, francosarto.com, ryka.com, bzees.com, and zodiacshoes.com, as well as Vince.com, blowfishshoes.com, and veronicabeard.com websites. In addition, it designs, sources, manufactures, and markets footwear to retail stores, such as online retailers, national chains, department stores, mass merchandisers, and independent retailers. Further, the company wholesales men’s footwear, apparel, leather goods, and accessories under the Allen Edmonds brand; footwear for women under LifeStride brand; Italian footwear Franco Sarto brand; athletic footwear for women under the Rykä brand; women’s shoe collection under the Vince brand; women’s footwear under the Bzees brand; and women’s footwear collection under Veronica Beard brand. The company was formerly known as Brown Shoe Company, Inc. and changed its name to Caleres, Inc. in May 2015. Caleres, Inc. was founded in 1878 and is headquartered in Saint Louis, Missouri.

About Carter’s

Carter’s, Inc. engages in the business of brand marketing of young children’s apparel. It operates through the following segments: the United States (US) Retail, US Wholesale, and International. The US Retail segment includes selling products through retail stores and ecommerce websites. The US Wholesale segment focuses on wholesale partners. The International segment is involved in selling in retail stores and ecommerce websites in Canada and Mexico, and to international wholesale customers and licensees. The company was founded by William Carter in 1865 and is headquartered in Atlanta, GA.