Guess? (NYSE: GES) and Stein Mart (NASDAQ:SMRT) are both small-cap consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, institutional ownership, risk, earnings, analyst recommendations, dividends and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Guess? and Stein Mart, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Guess? 1 5 3 0 2.22
Stein Mart 0 0 0 0 N/A

Guess? currently has a consensus price target of $13.74, indicating a potential downside of 20.22%. Given Guess?’s higher probable upside, analysts plainly believe Guess? is more favorable than Stein Mart.

Valuation & Earnings

This table compares Guess? and Stein Mart’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Guess? $2.25 billion 0.64 $137.42 million $0.11 156.55
Stein Mart $1.33 billion 0.05 $326,000.00 ($0.55) -2.31

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

Dividends

Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 5.2%. Stein Mart pays an annual dividend of $0.15 per share and has a dividend yield of 11.8%. Guess? pays out 818.2% 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 pays out -27.3% of its earnings in the form of a dividend. Stein Mart has raised its dividend for 3 consecutive years. Stein Mart is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

79.5% of Guess? shares are owned by institutional investors. Comparatively, 33.0% of Stein Mart shares are owned by institutional investors. 29.6% of Guess? shares are owned by insiders. Comparatively, 34.7% of Stein Mart shares are owned 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.

Volatility and Risk

Guess? has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500. Comparatively, Stein Mart has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares Guess? and Stein Mart’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Guess? 0.43% 4.14% 2.62%
Stein Mart -1.89% -34.59% -4.43%

Summary

Guess? beats Stein Mart on 10 of the 15 factors compared between the two stocks.

Guess? Company Profile

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.

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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