Floor & Decor (NYSE:FND – Get Free Report) and Cato (NYSE:CATO – Get Free Report) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, profitability, risk and valuation.
Insider and Institutional Ownership
61.1% of Cato shares are held by institutional investors. 1.8% of Floor & Decor shares are held by insiders. Comparatively, 18.3% of Cato shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Profitability
This table compares Floor & Decor and Cato’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Floor & Decor | 5.05% | 8.40% | 3.68% |
| Cato | -0.87% | -3.39% | -1.29% |
Earnings & Valuation
This table compares Floor & Decor and Cato”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Floor & Decor | $4.68 billion | 1.17 | $208.65 million | $2.23 | 22.98 |
| Cato | $653.81 million | 0.07 | -$5.91 million | ($0.30) | -7.78 |
Floor & Decor has higher revenue and earnings than Cato. Cato is trading at a lower price-to-earnings ratio than Floor & Decor, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Floor & Decor has a beta of 1.56, meaning that its share price is 56% more volatile than the S&P 500. Comparatively, Cato has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations for Floor & Decor and Cato, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Floor & Decor | 5 | 12 | 4 | 0 | 1.95 |
| Cato | 1 | 0 | 0 | 0 | 1.00 |
Floor & Decor presently has a consensus target price of $54.70, indicating a potential upside of 6.74%. Given Floor & Decor’s stronger consensus rating and higher possible upside, research analysts clearly believe Floor & Decor is more favorable than Cato.
Summary
Floor & Decor beats Cato on 12 of the 14 factors compared between the two stocks.
About Floor & Decor
Floor & Decor Holdings, Inc. engages in the retail of hard surface flooring and related accessories. It provides wood, stone, and flooring products. Its products include vinyl, laminate, and tiles with materials installation for living rooms, kitchen, bathrooms, and walls. The company was founded by George Vincent West in 2000 and is headquartered in Atlanta, GA.
About Cato
The Cato Corporation, together with its subsidiaries, operates as a specialty retailer of fashion apparel and accessories primarily in the southeastern United States. It operates through two segments, Retail and Credit. The company's stores and e-commerce websites offer a range of apparel and accessories, including dressy, career, and casual sportswear; and dresses, coats, shoes, lingerie, costume jewelry, and handbags, as well as men's wear, and lines for kids and infants. It operates its stores and e-commerce websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. It also provides credit card services to its customers, as well as layaway plans for customers. The Cato Corporation was incorporated in 1946 and is headquartered in Charlotte, North Carolina.
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