Ascena Retail Group (NASDAQ: ASNA) and Stage Stores (NYSE:SSI) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Risk & Volatility

Ascena Retail Group has a beta of 1.91, indicating that its share price is 91% more volatile than the S&P 500. Comparatively, Stage Stores has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Ascena Retail Group and Stage Stores, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ascena Retail Group 1 7 0 0 1.88
Stage Stores 1 2 0 0 1.67

Ascena Retail Group currently has a consensus target price of $3.83, indicating a potential upside of 93.60%. Stage Stores has a consensus target price of $2.00, indicating a potential upside of 13.64%. Given Ascena Retail Group’s stronger consensus rating and higher probable upside, research analysts plainly believe Ascena Retail Group is more favorable than Stage Stores.

Dividends

Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 11.4%. Ascena Retail Group does not pay a dividend. Stage Stores pays out -11.4% of its earnings in the form of a dividend. Ascena Retail Group has increased its dividend for 7 consecutive years.

Institutional & Insider Ownership

95.7% of Ascena Retail Group shares are owned by institutional investors. Comparatively, 62.5% of Stage Stores shares are owned by institutional investors. 8.6% of Ascena Retail Group shares are owned by company insiders. Comparatively, 7.4% of Stage Stores shares are owned 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.

Earnings & Valuation

This table compares Ascena Retail Group and Stage Stores’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ascena Retail Group $6.80 billion 0.06 $581.10 million ($5.33) -0.37
Stage Stores $1.46 billion 0.03 $28.34 million ($1.76) -1.00

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

Profitability

This table compares Ascena Retail Group and Stage Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ascena Retail Group -15.25% 2.96% 0.94%
Stage Stores -3.27% -7.78% -3.29%

Summary

Ascena Retail Group beats Stage Stores on 11 of the 15 factors compared between the two stocks.

About Ascena Retail Group

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

About Stage Stores

Stage Stores, Inc. operates specialty department stores mainly in small and mid-sized towns and communities. The Company’s department stores offer a range of brand name and private label apparel, accessories, cosmetics, footwear and home goods. The Company operates approximately 830 specialty department stores in over 40 states under the BEALLS, GOODY’S, PALAIS ROYAL, PEEBLES and STAGE nameplates and a direct-to-consumer business. The Company’s direct-to-consumer business consists of its e-commerce Website and Send program. The Company’s e-commerce Website includes a range of merchandise categories found in its stores, as well as other product offerings. The Company’s in-store Send program allows customers to have merchandise shipped directly to their homes if the preferred size or color is not available in their local store. The Company’s private label portfolio brands are developed and sourced through agreements with third-party vendors.

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