Rocky Brands (NASDAQ: RCKY) and Weyco Group (NASDAQ:WEYS) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, valuation, institutional ownership, profitabiliy, earnings and dividends.

Institutional & Insider Ownership

51.4% of Rocky Brands shares are held by institutional investors. Comparatively, 32.1% of Weyco Group shares are held by institutional investors. 8.5% of Rocky Brands shares are held by company insiders. Comparatively, 42.8% of Weyco Group shares are held 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.

Risk & Volatility

Rocky Brands has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, Weyco Group has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Dividends

Rocky Brands pays an annual dividend of $0.44 per share and has a dividend yield of 3.1%. Weyco Group pays an annual dividend of $0.88 per share and has a dividend yield of 3.1%. Rocky Brands pays out -733.2% of its earnings in the form of a dividend. Weyco Group pays out 57.9% 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.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Rocky Brands and Weyco Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rocky Brands 0 2 0 0 2.00
Weyco Group 0 1 0 0 2.00

Rocky Brands currently has a consensus target price of $12.00, indicating a potential downside of 16.67%. Weyco Group has a consensus target price of $26.00, indicating a potential downside of 7.18%. Given Weyco Group’s higher probable upside, analysts plainly believe Weyco Group is more favorable than Rocky Brands.

Earnings & Valuation

This table compares Rocky Brands and Weyco Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rocky Brands $265.80 million 0.40 $11.36 million ($0.06) -239.96
Weyco Group $287.15 million 1.01 $26.51 million $1.52 18.43

Weyco Group has higher revenue and earnings than Rocky Brands. Rocky Brands is trading at a lower price-to-earnings ratio than Weyco Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Rocky Brands and Weyco Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rocky Brands -0.17% 1.65% 1.18%
Weyco Group 5.57% 6.83% 5.27%

Summary

Weyco Group beats Rocky Brands on 11 of the 13 factors compared between the two stocks.

About Rocky Brands

Rocky Brands, Inc. is a designer, manufacturer and marketer of footwear and apparel marketed under a portfolio of brand names, including Rocky, Georgia Boot, Durango, Lehigh, Creative Recreation and the licensed brand Michelin. The Company operates its business through three segments: wholesale, retail and military. In its wholesale segment, the Company distributes its products through a range of distribution channels representing over 10,000 retail store locations in the United States and Canada, as well as in other international markets. Its wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants and uniform stores. In its retail segment, the Company sells its products directly to consumers through its consumer and business direct Websites and its Rocky outlet store. In its military segment, the Company sells footwear under the Rocky label to the United States military.

About Weyco Group

Weyco Group, Inc. is engaged in the design and distribution of footwear. The Company designs and markets footwear for men, women and children. The Company operates through two segments: the North American wholesale segment (wholesale) and the North American retail segment (retail). The Company also has other wholesale and retail businesses overseas, which include its businesses in Australia, South Africa and Asia Pacific (collectively known as Florsheim Australia), and its wholesale and retail businesses in Europe (Florsheim Europe). Its products consist of leather dress shoes and casual footwear composed of man-made materials or leather. In addition, the Company offers outdoor boots, shoes and sandals. As of December 31, 2016, the Company’s shoes were marketed throughout the United States and Canada in over 10,000 shoe, clothing and department stores. As of December 31, 2016, the retail segment consisted of 13 Company-operated stores and an Internet business in the United States.

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