Citi Trends (NASDAQ: CTRN) and Guess? (NYSE:GES) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.

Institutional and Insider Ownership

86.5% of Citi Trends shares are owned by institutional investors. Comparatively, 81.5% of Guess? shares are owned by institutional investors. 4.6% of Citi Trends shares are owned by insiders. Comparatively, 29.6% of Guess? shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Citi Trends has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500. Comparatively, Guess? has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Dividends

Citi Trends pays an annual dividend of $0.32 per share and has a dividend yield of 1.2%. Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 5.4%. Citi Trends pays out 31.4% of its earnings in the form of a dividend. Guess? pays out -2,250.0% 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. Guess? has raised its dividend for 3 consecutive years. Guess? is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Citi Trends and Guess?’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Citi Trends 2.04% 7.70% 5.14%
Guess? -0.10% 4.35% 2.72%

Analyst Ratings

This is a summary of recent ratings and target prices for Citi Trends and Guess?, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Citi Trends 0 0 0 0 N/A
Guess? 1 4 4 0 2.33

Guess? has a consensus price target of $14.11, indicating a potential downside of 15.54%. Given Guess?’s higher probable upside, analysts clearly believe Guess? is more favorable than Citi Trends.

Valuation & Earnings

This table compares Citi Trends and Guess?’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Citi Trends $695.17 million 0.55 $13.33 million $1.02 27.21
Guess? $2.21 billion 0.62 $22.76 million ($0.04) -417.75

Guess? has higher revenue and earnings than Citi Trends. Guess? is trading at a lower price-to-earnings ratio than Citi Trends, indicating that it is currently the more affordable of the two stocks.

Summary

Guess? beats Citi Trends on 10 of the 16 factors compared between the two stocks.

Citi Trends Company Profile

Citi Trends, Inc. is a retailer of urban fashion apparel and accessories. The Company’s segment is retail operations. The Company operates approximately 520 stores in both urban and rural markets in over 30 states. The Company offers products under its brands, such as Citi Steps and Red Ape. The Company’s merchandise includes apparel, accessories and home. Within apparel, the Company offers fashion sportswear for men, women and children, including offerings for newborns, infants, toddlers, boys and girls. Accessories include handbags, jewelry, footwear, belts, intimate apparel, scrubs and sleepwear. The Company’s home merchandise includes decorative home product, functional home product, beauty, books, toys and electronic accessories. The Company sources its merchandise from approximately 1,700 vendors, consisting of domestic manufacturers and importers.

Guess? Company Profile

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collections of apparel and accessories for men, women and children. The Company operates through five segments: Americas Retail, Europe, Asia, Americas Wholesale and Licensing. The Americas Retail segment includes the Company’s retail and e-commerce operations in North and Central America and its retail operations in South America. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Licensing segment includes the around the world licensing operations of the Company. Its apparel is marketed under various names, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, MARCIANO, Question Mark and Triangle Design, GUESS Kids, Baby GUESS, YES, G by GUESS and GUESS by MARCIANO.

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