Kate Spade & Co (KATE) & Xcel Brands (XELB) Critical Contrast

Kate Spade & Co (NYSE: KATE) and Xcel Brands (NASDAQ:XELB) are both cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Profitability

This table compares Kate Spade & Co and Xcel Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kate Spade & Co 0.44% 1.11% 0.43%
Xcel Brands 8.92% 2.34% 1.68%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Kate Spade & Co and Xcel Brands, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kate Spade & Co 1 13 1 0 2.00
Xcel Brands 0 0 2 0 3.00

Kate Spade & Co currently has a consensus target price of $20.04, indicating a potential upside of 8.39%. Xcel Brands has a consensus target price of $4.50, indicating a potential upside of 50.00%. Given Xcel Brands’ stronger consensus rating and higher probable upside, analysts plainly believe Xcel Brands is more favorable than Kate Spade & Co.

Earnings and Valuation

This table compares Kate Spade & Co and Xcel Brands’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kate Spade & Co N/A N/A N/A $1.10 16.81
Xcel Brands $32.75 million 1.69 $2.73 million $0.14 21.43

Xcel Brands has higher revenue and earnings than Kate Spade & Co. Kate Spade & Co is trading at a lower price-to-earnings ratio than Xcel Brands, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Kate Spade & Co has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, Xcel Brands has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Institutional & Insider Ownership

97.9% of Kate Spade & Co shares are held by institutional investors. Comparatively, 20.9% of Xcel Brands shares are held by institutional investors. 0.8% of Kate Spade & Co shares are held by company insiders. Comparatively, 59.9% of Xcel Brands shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Xcel Brands beats Kate Spade & Co on 8 of the 11 factors compared between the two stocks.

About Kate Spade & Co

Kate Spade & Company is engaged in the design and marketing of a range of accessories and apparel. It operates through three segments. The KATE SPADE North America segment consists of the Company’s kate spade new york and JACK SPADE brands in North America. The KATE SPADE International segment consists of the Company’s kate spade new york and JACK SPADE brands in international markets, which operates principally in Japan, Asia (excluding Japan), Europe and Latin America). The Adelington Design Group segment primarily consists of exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands. In addition, the Adelington Design Group segment serves J.C. Penney Corporation, Inc. (JCPenney) through exclusive supplier agreements for the LIZ CLAIBORNE and MONET jewelry lines. As of December 31, 2016, it operated 98 the United States Specialty Retail Stores; 35 Foreign Specialty Retail Stores; 65 the United States Outlet Stores; 17 Foreign Outlet Stores, and 54 Concessions.

About Xcel Brands

Xcel Brands, Inc. is a brand development and media company. The Company is engaged in the design, production, licensing, marketing, and direct to consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of consumer lifestyle brands. The Company’s brand portfolio consists of the Isaac Mizrahi, Judith Ripka, H Halston, C Wonder and Highline Collective brands. The Company also manages and designs the Liz Claiborne New York brand (LCNY Brand). Isaac Mizrahi has over 150 different product categories, including sportswear, footwear, handbags, watches, eyewear, fragrance, tech accessories, intimates, bridal gowns and accessories, pet products, home and other merchandise. The Company’s Judith Ripka is a luxury jewelry brand. Wonder brand offers women’s clothing, footwear, jewelry and accessories; housewares, and home decor and gifts. The Liz Claiborne New York includes women’s apparel, footwear, outerwear and accessories.

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