ON (NYSE:ONON) versus Cato (NYSE:CATO) Head to Head Comparison

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

Valuation and Earnings

This table compares Cato and ON”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$653.81 million	0.09	-$5.91 million	($0.31)	-9.41
ON	$3.12 billion	7.61	$245.87 million	$0.93	40.01

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

Analyst Recommendations

This is a breakdown of recent ratings for Cato and ON, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	1	0	0	0	1.00
ON	1	4	15	2	2.82

ON has a consensus target price of $55.05, indicating a potential upside of 47.94%. Given ON’s stronger consensus rating and higher probable upside, analysts plainly believe ON is more favorable than Cato.

Volatility and Risk

Cato has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, ON has a beta of 2.09, meaning that its stock price is 109% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cato	-0.90%	-3.57%	-1.35%
ON	7.92%	15.72%	8.99%

Insider and Institutional Ownership

61.1% of Cato shares are owned by institutional investors. Comparatively, 36.4% of ON shares are owned by institutional investors. 18.3% of Cato shares are owned by insiders. Comparatively, 68.6% of ON 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.

Summary

ON beats Cato on 14 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, as well as men's wear, and lines for kids and infants. It operates its stores and e-commerce websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. It also provides credit card services to its customers, as well as layaway plans for customers. The Cato Corporation was incorporated in 1946 and is headquartered in Charlotte, North Carolina.

About ON

On Holding AG engages in the development and distribution of sports products such as footwear, apparel, and accessories for high-performance running, outdoor, all-day activities, and tennis. It sells its products worldwide through independent retailers and global distributors, its own online presence, and its own stores. The company was founded by David Allemann, Olivier Bernhard, and Caspar Coppetti in January 2010 and is headquartered in Zurich, Switzerland.