Chico’s FAS (NYSE: CHS) and Stein Mart (NASDAQ:SMRT) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, profitabiliy, analyst recommendations and institutional ownership.
This table compares Chico’s FAS and Stein Mart’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Chico’s FAS and Stein Mart’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Chico’s FAS||$2.42 billion||0.48||$281.35 million||$0.71||12.87|
|Stein Mart||$1.34 billion||0.06||$27.67 million||($0.21)||-7.90|
Chico’s FAS has higher revenue and earnings than Stein Mart. Stein Mart is trading at a lower price-to-earnings ratio than Chico’s FAS, indicating that it is currently the more affordable of the two stocks.
Chico’s FAS pays an annual dividend of $0.33 per share and has a dividend yield of 3.6%. Stein Mart pays an annual dividend of $0.30 per share and has a dividend yield of 18.1%. Chico’s FAS pays out 46.5% of its earnings in the form of a dividend. Stein Mart pays out -142.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Chico’s FAS has increased its dividend for 7 consecutive years. Stein Mart is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility & Risk
Chico’s FAS has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500. Comparatively, Stein Mart has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.
This is a breakdown of recent ratings and recommmendations for Chico’s FAS and Stein Mart, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Chico’s FAS presently has a consensus price target of $13.69, indicating a potential upside of 49.81%. Stein Mart has a consensus price target of $7.50, indicating a potential upside of 351.81%. Given Stein Mart’s higher possible upside, analysts clearly believe Stein Mart is more favorable than Chico’s FAS.
Insider and Institutional Ownership
95.6% of Chico’s FAS shares are owned by institutional investors. Comparatively, 42.3% of Stein Mart shares are owned by institutional investors. 1.8% of Chico’s FAS shares are owned by company insiders. Comparatively, 34.7% of Stein Mart shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Chico’s FAS beats Stein Mart on 11 of the 16 factors compared between the two stocks.
Chico’s FAS Company Profile
Chico’s FAS, Inc. is an omni-channel specialty retailer of women’s private branded, casual-to-dressy clothing, intimates and accessories, operating under the Chico’s, White House Black Market (WHBM) and Soma brand names. The Company is also engaged in the sale of merchandise in its domestic and international retail stores. The Chico’s brand sells private branded clothing focusing on women 45 and older. Chico’s apparel includes the Black Label, Zenergy and Travelers collections. The WHBM brand sells private branded clothing focusing on women 35 and older. WHBM sells clothing and accessory items, including everyday basics, wear-to-work, denim and occasion. It offers black and white color palette. The accessories at WHBM include shoes, belts, scarves, handbags and jewelry. The Soma brand sells private branded lingerie, sleepwear, loungewear, activewear and beauty products focusing on women 35 and older. The lingerie category includes bras, panties, shapewear and swimwear.
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.
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