Ross Stores (NASDAQ: ROST) and Genesco (NYSE:GCO) are both apparel & accessories retailers – nec companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, risk, dividends, valuation and earnings.

Volatility and Risk

Ross Stores has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Genesco has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Profitability

This table compares Ross Stores and Genesco’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%
Genesco 2.43% 7.36% 4.34%

Valuation and Earnings

This table compares Ross Stores and Genesco’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ross Stores $12.87 billion 1.97 $1.12 billion $3.03 21.68
Genesco $2.87 billion 0.18 $97.43 million $3.55 7.31

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Ross Stores and Genesco, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ross Stores 0 7 13 0 2.65
Genesco 0 4 3 0 2.43

Ross Stores currently has a consensus target price of $70.71, indicating a potential upside of 7.64%. Genesco has a consensus target price of $32.71, indicating a potential upside of 26.07%. Given Genesco’s higher probable upside, analysts plainly believe Genesco is more favorable than Ross Stores.

Institutional and Insider Ownership

90.5% of Ross Stores shares are owned by institutional investors. Comparatively, 94.7% of Genesco shares are owned by institutional investors. 2.3% of Ross Stores shares are owned by insiders. Comparatively, 3.3% of Genesco shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. Genesco does not pay a dividend. Ross Stores pays out 21.1% of its earnings in the form of a dividend. Genesco has increased its dividend for 10 consecutive years.

Summary

Ross Stores beats Genesco on 10 of the 17 factors compared between the two stocks.

Ross Stores Company Profile

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.

Genesco Company Profile

Genesco Inc. is a retailer and wholesaler of footwear, apparel and accessories. The Company operates in five segments: Journeys Group, Schuh Group, Lids Sports Group, Johnston & Murphy Group and Licensed Brands. It relies on independent third-party manufacturers for production of its footwear products sold at wholesale. It sources footwear and accessory products from foreign manufacturers located in Bangladesh, Brazil, Cambodia, Canada, China, Dominican Republic, El Salvador, France, Germany, Hong Kong, India, Indonesia, Italy, Mexico, the Netherlands, Portugal, Peru, Romania, Taiwan and Vietnam. As of January 28, 2017, it operated 2,794 retail footwear, headwear and sports apparel and accessory stores and leased departments located primarily throughout the United States and in Puerto Rico, including 147 headwear and sports apparel and accessory stores and 87 footwear stores in Canada and 128 footwear stores in the United Kingdom, the Republic of Ireland and Germany.

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