Shoe Carnival (NASDAQ: SCVL) and DSW (NYSE:DSW) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitabiliy, earnings and institutional ownership.

Earnings and Valuation

This table compares Shoe Carnival and DSW’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Shoe Carnival $994.02 million 0.35 $62.91 million $1.19 17.15
DSW $2.72 billion 0.52 $263.39 million $1.43 12.41

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

Dividends

Shoe Carnival pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. DSW pays an annual dividend of $0.80 per share and has a dividend yield of 4.5%. Shoe Carnival pays out 23.5% of its earnings in the form of a dividend. DSW pays out 55.9% 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.

Risk and Volatility

Shoe Carnival has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, DSW has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Institutional and Insider Ownership

65.1% of Shoe Carnival shares are owned by institutional investors. Comparatively, 92.2% of DSW shares are owned by institutional investors. 32.6% of Shoe Carnival shares are owned by insiders. Comparatively, 20.4% of DSW shares are owned by 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.

Profitability

This table compares Shoe Carnival and DSW’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shoe Carnival 2.12% 7.27% 4.91%
DSW 4.32% 12.06% 7.81%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Shoe Carnival and DSW, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shoe Carnival 0 5 0 0 2.00
DSW 0 15 2 0 2.12

Shoe Carnival presently has a consensus target price of $22.50, suggesting a potential upside of 10.24%. DSW has a consensus target price of $21.12, suggesting a potential upside of 18.96%. Given DSW’s stronger consensus rating and higher probable upside, analysts clearly believe DSW is more favorable than Shoe Carnival.

Summary

DSW beats Shoe Carnival on 12 of the 16 factors compared between the two stocks.

About Shoe Carnival

Shoe Carnival, Inc. is a family footwear retailer. The Company’s primary activity is the sale of footwear and related products through its retail stores in approximately 30 states within the continental United States and in Puerto Rico. It also offers online shopping on its e-commerce site at www.shoecarnival.com. Its products assortment includes dress and casual shoes, sandals, boots and an assortment of athletic for the entire family in four general categories-women’s, men’s, children’s and athletics. In addition to footwear, its stores carry selected accessory items, such as socks, belts, shoe care items, handbags, sport bags, backpacks, jewelry, scarves and wallets. It classifies athletic shoes by functionality, such as running, basketball or fitness shoes. As of January 28, 2017, it operated 415 stores in 35 states and Puerto Rico and offered online shopping at www.shoecarnival.com.

About DSW

DSW Inc. is a footwear retailer. The Company offers an assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids. The Company operates through two segments: the DSW segment (DSW), which includes DSW stores and dsw.com, and the Affiliated Business Group (ABG) segment. As of January 28, 2017, the Company operated 501 DSW stores, dsw.com and shoe departments in 288 Stein Mart stores and Steinmart.com, 106 Gordmans stores and Gordmans.com, and one Frugal Fannie’s store. DSW separates its merchandise into three primary categories: women’s footwear; men’s footwear, and accessories and other (which includes kids’ footwear). Other primarily includes Ebuys and its investment in Town Shoes. The ABG segment partners with three other retailers to help build and optimize their in-store and online footwear businesses.

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