Stein Mart (NASDAQ: SMRT) and Abercrombie & Fitch (NYSE:ANF) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.
Insider & Institutional Ownership
20.6% of Stein Mart shares are owned by institutional investors. Comparatively, 97.7% of Abercrombie & Fitch shares are owned by institutional investors. 34.7% of Stein Mart shares are owned by company insiders. Comparatively, 0.6% of Abercrombie & Fitch shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Volatility & Risk
Stein Mart has a beta of 0.29, meaning that its stock price is 71% less volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.
Stein Mart pays an annual dividend of $0.08 per share and has a dividend yield of 14.3%. Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 3.9%. Stein Mart pays out -12.9% of its earnings in the form of a dividend. Abercrombie & Fitch pays out -275.9% 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.
This is a summary of recent ratings and target prices for Stein Mart and Abercrombie & Fitch, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Abercrombie & Fitch||6||12||4||0||1.91|
Abercrombie & Fitch has a consensus price target of $15.05, indicating a potential downside of 26.79%. Given Abercrombie & Fitch’s higher possible upside, analysts clearly believe Abercrombie & Fitch is more favorable than Stein Mart.
Earnings & Valuation
This table compares Stein Mart and Abercrombie & Fitch’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Stein Mart||$1.36 billion||0.02||$400,000.00||($0.62)||-0.90|
|Abercrombie & Fitch||$3.33 billion||0.42||$3.95 million||($0.29)||-71.48|
Abercrombie & Fitch has higher revenue and earnings than Stein Mart. Abercrombie & Fitch is trading at a lower price-to-earnings ratio than Stein Mart, indicating that it is currently the more affordable of the two stocks.
This table compares Stein Mart and Abercrombie & Fitch’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Abercrombie & Fitch||-0.55%||0.80%||0.43%|
Abercrombie & Fitch beats Stein Mart on 12 of the 14 factors compared between the two stocks.
About Stein Mart
Stein Mart, Inc. is a national retailer offering the fashion merchandise, service and presentation of a department or specialty store. The Company offers apparel for women and men, as well as accessories, shoes and home fashions. The Company’s target customers are women over 45 years old. The Company operates approximately 280 stores in over 30 states and an Internet store. Its stores are located in the Northeast, Midwest, Southeast, Texas and the Southwest. It is concentrated in the Southeast and Texas where over 180 of its stores are located. The Company’s stores offer a range of services, such as merchandise locator service, a Preferred Customer program, co-branded and private label credit card programs, and electronic gift cards. The Company’s merchants purchase products from approximately 1,200 vendors. It leases all of its store locations, generally for approximately 10 years with options to extend the lease term for over two or five year periods.
About Abercrombie & Fitch
Abercrombie & Fitch Co. is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company operates through two segments: Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands, and Hollister, which includes the Company’s Hollister and Gilly Hicks brands. The Company offers an array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear, and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. As of January 28, 2017, the Company operated 709 stores in the United States and 189 stores outside of the United States.
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