Stein Mart (NASDAQ: SMRT) and Abercrombie & Fitch (NYSE:ANF) are both small-cap cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, earnings, institutional ownership, valuation and risk.
Institutional and Insider Ownership
18.7% of Stein Mart shares are owned by institutional investors. Comparatively, 99.5% of Abercrombie & Fitch shares are owned by institutional investors. 34.7% of Stein Mart shares are owned by insiders. Comparatively, 0.6% of Abercrombie & Fitch shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Stein Mart has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.
Stein Mart pays an annual dividend of $0.08 per share and has a dividend yield of 10.4%. Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 3.6%. Stein Mart pays out -12.9% of its earnings in the form of a dividend. Abercrombie & Fitch pays out 228.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Stein Mart is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Stein Mart and Abercrombie & Fitch’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Abercrombie & Fitch||0.20%||4.86%||2.57%|
This is a summary of recent ratings and price targets for Stein Mart and Abercrombie & Fitch, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Abercrombie & Fitch||6||11||3||0||1.85|
Abercrombie & Fitch has a consensus target price of $17.89, suggesting a potential downside of 18.86%. Given Abercrombie & Fitch’s higher possible upside, analysts plainly believe Abercrombie & Fitch is more favorable than Stein Mart.
Valuation and Earnings
This table compares Stein Mart and Abercrombie & Fitch’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Stein Mart||$1.36 billion||0.03||$400,000.00||($0.62)||-1.24|
|Abercrombie & Fitch||$3.49 billion||0.43||$7.09 million||$0.35||63.00|
Abercrombie & Fitch has higher revenue and earnings than Stein Mart. Stein Mart is trading at a lower price-to-earnings ratio than Abercrombie & Fitch, indicating that it is currently the more affordable of the two stocks.
Abercrombie & Fitch beats Stein Mart on 12 of the 15 factors compared between the two stocks.
Stein Mart Company Profile
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.
Abercrombie & Fitch Company Profile
Abercrombie & Fitch Co. is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company operates through two segments: Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands, and Hollister, which includes the Company’s Hollister and Gilly Hicks brands. The Company offers an array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear, and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. As of January 28, 2017, the Company operated 709 stores in the United States and 189 stores outside of the United States.
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