Comparing Carter’s (NYSE:CRI) & PVH (NYSE:PVH)

PVH (NYSE:PVH) and Carter’s (NYSE:CRI) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Dividends

PVH pays an annual dividend of $0.15 per share and has a dividend yield of 0.2%. Carter’s pays an annual dividend of $1.00 per share and has a dividend yield of 3.4%. PVH pays out -4.1% of its earnings in the form of a dividend. Carter’s pays out 18.7% 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.

Analyst Ratings

This is a summary of current ratings and price targets for PVH and Carter’s, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PVH	3	5	6	0	2.21
Carter’s	1	3	4	2	2.70

PVH currently has a consensus target price of $86.55, suggesting a potential upside of 17.97%. Carter’s has a consensus target price of $40.88, suggesting a potential upside of 37.88%. Given Carter’s’ stronger consensus rating and higher probable upside, analysts clearly believe Carter’s is more favorable than PVH.

Profitability

This table compares PVH and Carter’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PVH	-1.89%	11.94%	5.04%
Carter’s	6.55%	12.78%	4.67%

Insider and Institutional Ownership

97.3% of PVH shares are held by institutional investors. 1.5% of PVH shares are held by insiders. Comparatively, 3.2% of Carter’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares PVH and Carter’s”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PVH	$8.95 billion	0.38	$25.30 million	($3.70)	-19.83
Carter’s	$2.90 billion	0.38	$91.80 million	$5.34	5.55

Carter’s has lower revenue, but higher earnings than PVH. PVH is trading at a lower price-to-earnings ratio than Carter’s, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

PVH has a beta of 1.72, indicating that its share price is 72% more volatile than the S&P 500. Comparatively, Carter’s has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Summary

Carter’s beats PVH on 10 of the 17 factors compared between the two stocks.

About PVH

PVH Corp. operates as an apparel company in the United States and internationally. The company operates through Tommy Hilfiger North America, Tommy Hilfiger International, Calvin Klein North America, Calvin Klein International, and Heritage Brands Wholesale segments. It designs and markets men's, women's, and children's branded apparel, footwear and accessories, underwear, sleepwear, outerwear, home furnishings, luggage, dresses, suits and swimwear, activewear, sportswear, socks and accessories, outerwear, golf products, footwear, watches and jewelry, eyeglasses and non-ophthalmic sunglasses, jeans wear, performance apparel, intimate apparel, dress shirts, handbags, fragrance, small leather goods, and other related products; and men's and boy's tailored clothing products, duvets, pillows, mattress pads and toppers, and feather beds. The company offers its products under its own brands, such as TOMMY HILFIGER, TOMMY JEANS, Calvin Klein, CK Calvin Klein, Calvin Klein Jeans, Calvin Klein Underwear, and Calvin Klein Performance, as well as various other owned, licensed, and private label brands. It distributes its products at wholesale in department, chain, and specialty stores; through warehouse clubs, mass market, and off-price and independent retailers; and through company-operated full-price, outlet stores, and concession locations; and through digital commerce sites. PVH Corp. was founded in 1881 and is based in New York, New York.

About Carter’s

Carter’s, Inc. engages in the business of brand marketing of young children’s apparel. It operates through the following segments: the United States (US) Retail, US Wholesale, and International. The US Retail segment includes selling products through retail stores and ecommerce websites. The US Wholesale segment focuses on wholesale partners. The International segment is involved in selling in retail stores and ecommerce websites in Canada and Mexico, and to international wholesale customers and licensees. The company was founded by William Carter in 1865 and is headquartered in Atlanta, GA.