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

Dividends

The Finish Line pays an annual dividend of $0.44 per share and has a dividend yield of 3.1%. DSW pays an annual dividend of $0.80 per share and has a dividend yield of 4.6%. The Finish Line pays out -95.7% 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.

Valuation & Earnings

This table compares The Finish Line and DSW’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Finish Line $1.84 billion 0.31 $120.58 million ($0.46) -30.43
DSW $2.72 billion 0.52 $263.39 million $1.43 12.25

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

Analyst Ratings

This is a summary of recent recommendations for The Finish Line and DSW, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Finish Line 0 17 4 0 2.19
DSW 0 15 2 0 2.12

The Finish Line presently has a consensus target price of $18.95, suggesting a potential upside of 35.36%. DSW has a consensus target price of $21.12, suggesting a potential upside of 20.52%. Given The Finish Line’s stronger consensus rating and higher probable upside, equities analysts plainly believe The Finish Line is more favorable than DSW.

Institutional & Insider Ownership

92.2% of DSW shares are owned by institutional investors. 4.0% of The Finish Line shares are owned by insiders. Comparatively, 20.4% of DSW shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares The Finish Line and DSW’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Finish Line -0.96% 8.71% 5.43%
DSW 4.32% 12.06% 7.81%

Volatility & Risk

The Finish Line has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, DSW has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Summary

DSW beats The Finish Line on 10 of the 16 factors compared between the two stocks.

The Finish Line Company Profile

The Finish Line, Inc. is a specialty retailer. The Company is a retailer of athletic shoes, apparel and accessories for men, women and kids, throughout the United States and Puerto Rico. The Company operates through the Finish Line brand. Finish Line is a retailer of athletic shoes, apparel and accessories. The Company has approximately 970 Finish Line branded locations primarily in the United States malls and shops inside Macy’s department stores. In addition, Finish Line operates an e-commerce site, www.finishline.com, as well as mobile commerce through m.finishline.com. Finish Line carries a selection of men’s, women’s and kids’ athletic shoes (footwear), as well as an assortment of apparel and accessories (softgoods). Brand names offered by Finish Line include Nike, Brand Jordan, adidas, Under Armour and Puma.

DSW Company Profile

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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