Financial Analysis: Burberry Group (OTCMKTS:BURBY) and Cato (NYSE:CATO)

Cato (NYSE:CATO) and Burberry Group (OTCMKTS:BURBY) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Profitability

This table compares Cato and Burberry Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cato	-0.90%	-3.57%	-1.35%
Burberry Group	N/A	N/A	N/A

Valuation and Earnings

This table compares Cato and Burberry Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$653.81 million	0.08	-$5.91 million	($0.31)	-8.63
Burberry Group	$3.14 billion	1.58	-$95.68 million	N/A	N/A

Cato has higher earnings, but lower revenue than Burberry Group.

Risk and Volatility

Cato has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Burberry Group has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Cato and Burberry Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	1	0	0	0	1.00
Burberry Group	0	0	0	3	4.00

Institutional and Insider Ownership

61.1% of Cato shares are owned by institutional investors. Comparatively, 10.3% of Burberry Group shares are owned by institutional investors. 18.1% of Cato shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Burberry Group beats Cato on 8 of the 11 factors compared between the two stocks.

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.

About Burberry Group

Burberry Group plc, together with its subsidiaries, manufactures, retails, and wholesales luxury goods under the Burberry brand. The company operates in two segments, Retail/Wholesale and Licensing. It provides womenswear, menswear, childrenswear, beauty, eyewear, shoes, and accessories, as well as leather goods, such as bags. The company also licenses third parties to manufacture and distribute products using the Burberry trademarks. It sells its products through Burberry mainline stores, concessions, outlets, digital commerce, Burberry franchisees, department stores, and multi-brand specialty accounts, as well as through Burberry.com website. It operates in the Asia Pacific, Europe, the Middle East, India, Africa, and the Americas. The company was founded in 1856 and is headquartered in London, the United Kingdom.