Analyzing Stein Mart (SMRT) and Ascena Retail Group (NASDAQ:ASNA)

Stein Mart (NASDAQ: SMRT) and Ascena Retail Group (NASDAQ:ASNA) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Profitability

This table compares Stein Mart and Ascena Retail Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stein Mart -1.89% -33.13% -4.25%
Ascena Retail Group -15.25% 2.96% 0.94%

Analyst Ratings

This is a summary of current recommendations for Stein Mart and Ascena Retail Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stein Mart 0 3 0 0 2.00
Ascena Retail Group 1 7 0 0 1.88

Stein Mart presently has a consensus target price of $7.50, suggesting a potential upside of 557.89%. Ascena Retail Group has a consensus target price of $3.83, suggesting a potential upside of 98.62%. Given Stein Mart’s stronger consensus rating and higher possible upside, analysts plainly believe Stein Mart is more favorable than Ascena Retail Group.

Dividends

Stein Mart pays an annual dividend of $0.30 per share and has a dividend yield of 26.3%. Ascena Retail Group does not pay a dividend. Stein Mart pays out -54.5% of its earnings in the form of a dividend.

Risk & Volatility

Stein Mart has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Ascena Retail Group has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500.

Earnings & Valuation

This table compares Stein Mart and Ascena Retail Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Stein Mart $1.33 billion 0.04 $2.13 million ($0.55) -2.07
Ascena Retail Group $6.80 billion 0.05 $581.10 million ($5.33) -0.36

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

Institutional and Insider Ownership

41.7% of Stein Mart shares are owned by institutional investors. Comparatively, 95.1% of Ascena Retail Group shares are owned by institutional investors. 34.7% of Stein Mart shares are owned by company insiders. Comparatively, 8.6% of Ascena Retail Group shares are owned by company 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.

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.

About Ascena Retail Group

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

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