Macy’s (NYSE: M) and The Bon-Ton Stores (OTCMKTS:BONT) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Profitability

This table compares Macy’s and The Bon-Ton Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Macy’s 2.83% 21.20% 4.66%
The Bon-Ton Stores -3.57% N/A -5.09%

Volatility and Risk

Macy’s has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, The Bon-Ton Stores has a beta of 3.33, indicating that its stock price is 233% more volatile than the S&P 500.

Dividends

Macy’s pays an annual dividend of $1.51 per share and has a dividend yield of 7.4%. The Bon-Ton Stores does not pay a dividend. Macy’s pays out 66.5% of its earnings in the form of a dividend. Macy’s has raised its dividend for 6 consecutive years.

Institutional and Insider Ownership

83.8% of Macy’s shares are held by institutional investors. Comparatively, 19.2% of The Bon-Ton Stores shares are held by institutional investors. 1.4% of Macy’s shares are held by insiders. Comparatively, 45.7% of The Bon-Ton Stores shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Macy’s and The Bon-Ton Stores’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Macy’s $25.78 billion 0.24 $619.00 million $2.27 8.96
The Bon-Ton Stores $2.67 billion 0.00 -$63.41 million ($4.60) -0.09

Macy’s has higher revenue and earnings than The Bon-Ton Stores. The Bon-Ton Stores is trading at a lower price-to-earnings ratio than Macy’s, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Macy’s and The Bon-Ton Stores, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Macy’s 2 11 7 0 2.25
The Bon-Ton Stores 0 0 0 0 N/A

Macy’s currently has a consensus price target of $25.56, indicating a potential upside of 25.60%. Given Macy’s’ higher probable upside, research analysts clearly believe Macy’s is more favorable than The Bon-Ton Stores.

Summary

Macy’s beats The Bon-Ton Stores on 12 of the 15 factors compared between the two stocks.

About Macy’s

Macy’s, Inc. is an omnichannel retail company operating stores, Websites and mobile applications under various brands, such as Macy’s, Bloomingdale’s and Bluemercury. The Company sells a range of merchandise, including apparel and accessories (men’s, women’s and children’s), cosmetics, home furnishings and other consumer goods. Its subsidiaries provide various support functions to its retail operations. Its bank subsidiary, FDS Bank, provides credit processing, certain collections, customer service and credit marketing services in respect of all credit card accounts that are owned either by Department Stores National Bank (DSNB), which is a subsidiary of Citibank N.A., or FDS Bank. The private label brands offered by the Company include Alfani, American Rag, Aqua, Bar III, Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Greg Norman for Tasso Elba, Holiday Lane, Home Design, Hotel Collection, John Ashford, Karen Scott, Thalia Sodi and lune+aster.

About The Bon-Ton Stores

The Bon-Ton Stores, Inc. is a department store operator. The Company operates through two segments: stores and eCommerce (its Internet Websites). The Company offers a range of brand-name fashion apparel and accessories for women, men and children. It operates approximately 270 stores in over 26 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates, encompassing a total of approximately 25 million square feet. Its nationally distributed brand assortment includes a range of labels in the apparel, accessories, footwear, cosmetics and home furnishings industries, such as Anne Klein, Calvin Klein, Carters, Chaps, Clarks, Clinique, Coach, Estee Lauder, Fossil, Free People, Frye, Jessica Simpson and Vince Camuto. Its private brand portfolio includes Laura Ashley, Ruff Hewn, Relativity and Casa by Victor Alfaro.

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