Christopher & Banks Corporation (NYSE: CBK) and Cato Corporation (The) (NYSE:CATO) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.

Volatility & Risk

Christopher & Banks Corporation has a beta of 3.59, meaning that its share price is 259% more volatile than the S&P 500. Comparatively, Cato Corporation (The) has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Profitability

This table compares Christopher & Banks Corporation and Cato Corporation (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Christopher & Banks Corporation -6.90% -34.64% -18.21%
Cato Corporation (The) 1.92% 4.37% 2.86%

Dividends

Cato Corporation (The) pays an annual dividend of $1.32 per share and has a dividend yield of 10.1%. Christopher & Banks Corporation does not pay a dividend. Cato Corporation (The) pays out 206.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Christopher & Banks Corporation has raised its dividend for 7 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Christopher & Banks Corporation and Cato Corporation (The), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Christopher & Banks Corporation 0 0 0 0 N/A
Cato Corporation (The) 0 1 0 0 2.00

Cato Corporation (The) has a consensus target price of $20.00, suggesting a potential upside of 53.73%. Given Cato Corporation (The)’s higher possible upside, analysts clearly believe Cato Corporation (The) is more favorable than Christopher & Banks Corporation.

Earnings and Valuation

This table compares Christopher & Banks Corporation and Cato Corporation (The)’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Christopher & Banks Corporation $366.82 million 0.16 -$10.09 million ($0.68) -2.22
Cato Corporation (The) $876.41 million 0.37 $34.92 million $0.64 20.33

Cato Corporation (The) has higher revenue and earnings than Christopher & Banks Corporation. Christopher & Banks Corporation is trading at a lower price-to-earnings ratio than Cato Corporation (The), indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

41.9% of Christopher & Banks Corporation shares are held by institutional investors. Comparatively, 88.4% of Cato Corporation (The) shares are held by institutional investors. 18.6% of Christopher & Banks Corporation shares are held by company insiders. Comparatively, 9.0% of Cato Corporation (The) shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Cato Corporation (The) beats Christopher & Banks Corporation on 10 of the 14 factors compared between the two stocks.

About Christopher & Banks Corporation

Christopher & Banks Corporation is a national specialty retailer featuring private-brand women’s apparel and accessories. The Company offers its customers an assortment of clothing for everyday needs. Its merchandise assortments include designs of women’s apparel, generally consisting of casual clothing, everyday basics, wear-to-work, leisure/active wear, and sleepwear in missy, petite and women sizes. The Company also offers a selection of jewelry and accessories, including footwear. The Company operates in the Retail Operations segment, which includes the operation of its retail stores, outlet stores, online and mobile. The Retail Operations segment includes activities generated by the Company’s retail store locations (Missy Petite Women (MPW), Outlet stores, Christopher & Banks (CB), and C.J. Banks (CJ)), as well as the e-commerce business. Its merchandise is developed for women of all sizes, age 40 and older.

About Cato Corporation (The)

The Cato Corporation is a fashion specialty retailer. The Company’s merchandise lines include dressy, career, and casual sportswear, dresses, coats, shoes, lingerie, costume jewelry, handbags, men’s wear and lines for kids and newborns. The Company has two segments: the operation of a fashion specialty stores segment (Retail Segment) and a credit card segment (Credit Segment). The Company operated its women’s fashion specialty retail stores in 33 states as of January 28, 2017, principally in the southeastern United States. The Company offers its own credit card to its customers and all credit authorizations, payment processing, and collection efforts are performed by a separate subsidiary of the Company. The Company’s stores offer an assortment of on-trend apparel and accessory items in primarily junior/missy, plus sizes, men’s and kids sizes with a focus on color, product coordination and selection.

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