Reviewing Kate Spade & Co (KATE) and Guess? (GES)

Kate Spade & Co (NYSE: KATE) and Guess? (NYSE:GES) are both cyclical consumer goods & services companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares Kate Spade & Co and Guess?’s 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%
Guess? -0.10% 4.35% 2.72%

Risk & Volatility

Kate Spade & Co has a beta of 1.75, suggesting that its share price is 75% more volatile than the S&P 500. Comparatively, Guess? has a beta of 0.43, suggesting that its share price is 57% less volatile than the S&P 500.

Institutional and Insider Ownership

97.9% of Kate Spade & Co shares are held by institutional investors. Comparatively, 81.5% of Guess? shares are held by institutional investors. 0.8% of Kate Spade & Co shares are held by company insiders. Comparatively, 29.6% of Guess? shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Kate Spade & Co and Guess?’s top-line 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
Guess? $2.21 billion 0.61 $22.76 million ($0.04) -409.75

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Kate Spade & Co and Guess?, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kate Spade & Co 1 13 1 0 2.00
Guess? 1 4 4 0 2.33

Kate Spade & Co presently has a consensus price target of $20.04, indicating a potential upside of 8.39%. Guess? has a consensus price target of $14.11, indicating a potential downside of 13.89%. Given Kate Spade & Co’s higher possible upside, research analysts plainly believe Kate Spade & Co is more favorable than Guess?.

Dividends

Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 5.5%. Kate Spade & Co does not pay a dividend. Guess? pays out -2,250.0% of its earnings in the form of a dividend. Guess? has increased its dividend for 3 consecutive years.

Summary

Guess? beats Kate Spade & Co on 9 of the 14 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 Guess?

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collections of apparel and accessories for men, women and children. The Company operates through five segments: Americas Retail, Europe, Asia, Americas Wholesale and Licensing. The Americas Retail segment includes the Company’s retail and e-commerce operations in North and Central America and its retail operations in South America. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Licensing segment includes the around the world licensing operations of the Company. Its apparel is marketed under various names, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, MARCIANO, Question Mark and Triangle Design, GUESS Kids, Baby GUESS, YES, G by GUESS and GUESS by MARCIANO.

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