Cabelas (NYSE: CAB) and The Michaels Companies (NASDAQ:MIK) are both mid-cap other specialty retailers – nec companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Insider and Institutional Ownership

56.9% of Cabelas shares are held by institutional investors. Comparatively, 98.4% of The Michaels Companies shares are held by institutional investors. 21.0% of Cabelas shares are held by insiders. Comparatively, 1.5% of The Michaels Companies shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Cabelas and The Michaels Companies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cabelas 0 4 1 0 2.20
The Michaels Companies 1 2 5 0 2.50

Cabelas presently has a consensus price target of $61.50, indicating a potential downside of 25.90%. The Michaels Companies has a consensus price target of $24.29, indicating a potential upside of 26.36%. Given The Michaels Companies’ stronger consensus rating and higher possible upside, analysts clearly believe The Michaels Companies is more favorable than Cabelas.

Valuation and Earnings

This table compares Cabelas and The Michaels Companies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Cabelas N/A N/A N/A $1.93 43.01
The Michaels Companies $5.20 billion 0.67 $378.15 million $1.89 10.17

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

Profitability

This table compares Cabelas and The Michaels Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cabelas 3.18% 5.53% 1.32%
The Michaels Companies 7.29% -22.53% 18.13%

Risk and Volatility

Cabelas has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500. Comparatively, The Michaels Companies has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Summary

The Michaels Companies beats Cabelas on 8 of the 11 factors compared between the two stocks.

Cabelas Company Profile

Cabela’s Incorporated is an omni-channel retailer of hunting, fishing, camping, shooting sports and related outdoor merchandise. The Company offers its customers a selection of national and regional brand products, including its Cabela’s brand. The Company’s segments include Merchandising and Financial Services. The Merchandising segment sells products and services through the Company’s retail stores, its e-commerce Websites (Cabelas.com and Cabelas.ca), and its catalogs. The United States merchandising and Canada merchandising operating segments have been aggregated into its Merchandising segment. The Financial Services segment issues co-branded credit cards, which are available through all of its channels. The Company’s product assortment includes merchandise and equipment for hunting, fishing, marine use, camping, and recreational sport shooting, along with casual and outdoor apparel and footwear, optics, vehicle accessories, and gifts and home furnishings with an outdoor theme.

The Michaels Companies Company Profile

The Michaels Companies, Inc. (Michaels) is an arts and crafts specialty retailer in North America. The Company’s segments include Michaels-U.S., Michaels-Canada, Aaron Brothers, Pat Catan’s and Darice. As of January 28, 2017, the Company operated 1,223 Michaels retail stores in 49 states and Canada, with approximately 18,000 average square feet of selling space per store. It operated 109 Aaron Brothers stores in nine states, with approximately 5,500 average square feet of selling space and 35 Pat Catan’s stores in five states, with approximately 32,000 average square feet of selling space, as of January 28, 2017. The Company also operates an international wholesale business under the Darice brand name. The Company’s stores purchase custom frames, framing supplies and mats from its framing operation and subsidiary, Artistree, Inc. (Artistree), which consists of a manufacturing facility and four regional processing centers.

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