Reviewing Cato (NYSE:CATO) & Rent the Runway (NASDAQ:RENT)

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

Insider & Institutional Ownership

73.1% of Rent the Runway shares are held by institutional investors. Comparatively, 61.1% of Cato shares are held by institutional investors. 0.4% of Rent the Runway shares are held by company insiders. Comparatively, 18.3% of Cato shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Rent the Runway and Cato, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rent the Runway	1	0	0	0	1.00
Cato	1	0	0	0	1.00

Valuation & Earnings

This table compares Rent the Runway and Cato”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rent the Runway	$329.80 million	0.31	$22.60 million	$6.49	0.46
Cato	$653.81 million	0.10	-$5.91 million	($0.01)	-329.00

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

Risk & Volatility

Rent the Runway has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Cato has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares Rent the Runway and Cato’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rent the Runway	8.51%	N/A	-30.10%
Cato	0.01%	0.05%	0.02%

Summary

Rent the Runway beats Cato on 7 of the 11 factors compared between the two stocks.

About Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.

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.