Ross Stores (NASDAQ: ROST) and Stein Mart (NASDAQ:SMRT) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, profitability, valuation, dividends and risk.

Volatility & Risk

Ross Stores has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500. Comparatively, Stein Mart has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Ross Stores and Stein Mart, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ross Stores 0 7 13 0 2.65
Stein Mart 0 0 0 0 N/A

Ross Stores currently has a consensus target price of $70.71, indicating a potential upside of 8.93%. Given Ross Stores’ higher probable upside, equities research analysts plainly believe Ross Stores is more favorable than Stein Mart.

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Stein Mart pays an annual dividend of $0.15 per share and has a dividend yield of 15.2%. Ross Stores pays out 21.1% of its earnings in the form of a dividend. Stein Mart pays out -27.3% 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. Ross Stores has raised its dividend for 10 consecutive years. Stein Mart is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

90.5% of Ross Stores shares are owned by institutional investors. Comparatively, 31.4% of Stein Mart shares are owned by institutional investors. 2.3% of Ross Stores shares are owned by insiders. Comparatively, 34.7% of Stein Mart shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Ross Stores and Stein Mart’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ross Stores $12.87 billion 1.95 $1.12 billion $3.03 21.42
Stein Mart $1.36 billion 0.03 $400,000.00 ($0.55) -1.80

Ross Stores has higher revenue and earnings than Stein Mart. Stein Mart is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ross Stores and Stein Mart’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ross Stores 8.87% 42.95% 21.77%
Stein Mart -1.89% -34.59% -4.43%

Summary

Ross Stores beats Stein Mart on 12 of the 15 factors compared between the two stocks.

About Ross Stores

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

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.

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