Cato (NYSE: CATO) and ASOS.com (OTCMKTS:ASOMY) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Risk and Volatility

Cato has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, ASOS.com has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Institutional & Insider Ownership

76.6% of Cato shares are owned by institutional investors. Comparatively, 0.2% of ASOS.com shares are owned by institutional investors. 10.6% of Cato shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Cato and ASOS.com’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cato $849.98 million 0.52 $8.54 million N/A N/A
ASOS.com $2.44 billion 2.97 $81.14 million $0.97 89.20

ASOS.com has higher revenue and earnings than Cato.

Profitability

This table compares Cato and ASOS.com’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cato 1.00% 5.87% 3.81%
ASOS.com N/A N/A N/A

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Cato and ASOS.com, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cato 0 1 0 0 2.00
ASOS.com 0 0 2 0 3.00

Cato currently has a consensus price target of $20.00, suggesting a potential upside of 11.67%. Given Cato’s higher possible upside, equities research analysts plainly believe Cato is more favorable than ASOS.com.

Dividends

Cato pays an annual dividend of $1.32 per share and has a dividend yield of 7.4%. ASOS.com does not pay a dividend. Cato has raised its dividend for 8 consecutive years.

Summary

Cato beats ASOS.com on 8 of the 15 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. It also provides men's wear, as well as lines for kids and newborns. The company operates its stores and e-commerce Websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. As of February 3, 2018, it operated 1,351 stores in 33 states. The company also provides credit card services to its customers, as well as layaway plans. The Cato Corporation was founded in 1946 and is headquartered in Charlotte, North Carolina.

About ASOS.com

ASOS Plc, together with its subsidiaries, operates as an online fashion retailer in the United Kingdom, the United States, Australia, France, Germany, Spain, Italy, and the Russian Federation. The company offers womenswear, menswear, and sportswear products. It sells approximately 85,000 branded and own-labeled products primarily through its Website, asos.com, as well as through social media platforms and magazines. The company is also involved in payment processing and marketing staff employment businesses. ASOS Plc was founded in 2000 and is headquartered in London, the United Kingdom.

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