Carter’s (NYSE: CRI) and Buckle, Inc. (The) (NYSE:BKE) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Dividends

Carter’s pays an annual dividend of $1.48 per share and has a dividend yield of 1.6%. Buckle, Inc. (The) pays an annual dividend of $1.00 per share and has a dividend yield of 6.3%. Carter’s pays out 29.1% of its earnings in the form of a dividend. Buckle, Inc. (The) pays out 55.6% 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. Carter’s has raised its dividend for 3 consecutive years and Buckle, Inc. (The) has raised its dividend for 3 consecutive years.

Volatility and Risk

Carter’s has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500. Comparatively, Buckle, Inc. (The) has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Carter’s and Buckle, Inc. (The), as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carter’s 0 4 9 0 2.69
Buckle, Inc. (The) 1 0 0 0 1.00

Carter’s currently has a consensus price target of $102.18, indicating a potential upside of 10.50%. Buckle, Inc. (The) has a consensus price target of $13.00, indicating a potential downside of 17.46%. Given Carter’s’ stronger consensus rating and higher probable upside, research analysts clearly believe Carter’s is more favorable than Buckle, Inc. (The).

Profitability

This table compares Carter’s and Buckle, Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carter’s 7.74% 33.18% 13.13%
Buckle, Inc. (The) 9.40% 19.96% 15.04%

Institutional and Insider Ownership

97.1% of Carter’s shares are owned by institutional investors. Comparatively, 59.5% of Buckle, Inc. (The) shares are owned by institutional investors. 3.1% of Carter’s shares are owned by company insiders. Comparatively, 41.7% of Buckle, Inc. (The) shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Carter’s and Buckle, Inc. (The)’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Carter’s $3.26 billion 1.36 $494.84 million $5.09 18.17
Buckle, Inc. (The) $927.07 million 0.82 $167.05 million $1.80 8.75

Carter’s has higher revenue and earnings than Buckle, Inc. (The). Buckle, Inc. (The) is trading at a lower price-to-earnings ratio than Carter’s, indicating that it is currently the more affordable of the two stocks.

Summary

Carter’s beats Buckle, Inc. (The) on 11 of the 16 factors compared between the two stocks.

About Carter’s

Carter’s, Inc. (Carter’s) is a marketer of apparel for babies and young children in the United States and Canada. The Company owns two brand names in the children’s apparel industry, Carter’s and OshKosh B’gosh (OshKosh). The Company operates through five segments: Carter’s Retail, Carter’s Wholesale, OshKosh Retail, OshKosh Wholesale and International. Its International segment includes company-operated retail stores and online Websites, wholesale operations, and royalty income from its international licensees. It markets products for consumers, and offer various product categories, including baby, sleepwear, play clothes, and related accessories. Its multi-channel international business model – retail stores, online and wholesale – enables it to reach a range of consumers around the world. As of December 31, 2016, its channels included approximately 18,000 wholesale locations, 792 stores in the United States, 164 stores in Canada, and its Canadian and the United States Websites.

About Buckle, Inc. (The)

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.

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