Buckle (NYSE: BKE) and Ross Stores (NASDAQ:ROST) are both cyclical consumer goods & services companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Institutional and Insider Ownership

59.8% of Buckle shares are owned by institutional investors. Comparatively, 90.9% of Ross Stores shares are owned by institutional investors. 41.7% of Buckle shares are owned by insiders. Comparatively, 2.3% of Ross Stores shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Buckle pays an annual dividend of $1.00 per share and has a dividend yield of 4.4%. Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 0.8%. Buckle pays out 57.8% of its earnings in the form of a dividend. Ross Stores pays out 20.4% 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. Buckle has increased its dividend for 10 consecutive years and Ross Stores has increased its dividend for 3 consecutive years. Buckle is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Buckle and Ross Stores, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Buckle 1 0 0 0 1.00
Ross Stores 0 7 15 0 2.68

Buckle presently has a consensus target price of $13.00, indicating a potential downside of 42.35%. Ross Stores has a consensus target price of $74.53, indicating a potential downside of 3.07%. Given Ross Stores’ stronger consensus rating and higher possible upside, analysts clearly believe Ross Stores is more favorable than Buckle.

Risk and Volatility

Buckle has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Earnings and Valuation

This table compares Buckle and Ross Stores’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Buckle $974.87 million 1.13 $97.96 million $1.73 13.03
Ross Stores $12.87 billion 2.28 $1.12 billion $3.13 24.57

Ross Stores has higher revenue and earnings than Buckle. Buckle is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Buckle and Ross Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Buckle 9.17% 19.13% 14.39%
Ross Stores 8.93% 43.21% 21.90%

Summary

Ross Stores beats Buckle on 13 of the 17 factors compared between the two stocks.

About Buckle

The Buckle, Inc. is a retailer of casual apparel, footwear and accessories for young men and women. As of January 28, 2017, the Company operated 467 retail stores in 44 states throughout the United States under the names Buckle and The Buckle. The Company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. The Company provides customer services, such as free hemming, free gift-wrapping, easy layaways, the Buckle private label credit card, and a guest loyalty program. The Company offers denims from brands, such as Miss Me, Rock Revival, Big Star Vintage, Buffalo Jeans, KanCan, Flying Monkey and Levi’s. Its other brands include Hurley, Billabong, Affliction, American Fighter, Fast & Furious, Oakley, Fox, Puma, Obey, RVCA, Salvage, 7 Diamonds, Nixon, Amuse Society, Free People, White Crow, Corral, Reef, Kustom, Timberland, UGG, TOMS, SAXX, Stance, Lokai, Ray-Ban, and Fossil.

About Ross Stores

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

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