Head to Head Review: Genesco (GCO) & Stage Stores (SSI)

Genesco (NYSE: GCO) and Stage Stores (NYSE:SSI) are both small-cap cyclical consumer goods & services companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

This table compares Genesco and Stage Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Genesco -4.24% 6.93% 4.03%
Stage Stores -3.33% -8.67% -3.56%

Institutional & Insider Ownership

97.7% of Genesco shares are held by institutional investors. Comparatively, 52.9% of Stage Stores shares are held by institutional investors. 3.3% of Genesco shares are held by company insiders. Comparatively, 7.4% of Stage Stores shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Genesco has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, Stage Stores has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Genesco and Stage Stores, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genesco 0 4 4 0 2.50
Stage Stores 1 2 0 0 1.67

Genesco presently has a consensus price target of $34.25, indicating a potential downside of 2.97%. Stage Stores has a consensus price target of $1.00, indicating a potential downside of 42.86%. Given Genesco’s stronger consensus rating and higher possible upside, analysts clearly believe Genesco is more favorable than Stage Stores.

Valuation and Earnings

This table compares Genesco and Stage Stores’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Genesco $2.87 billion 0.25 $97.43 million ($6.30) -5.60
Stage Stores $1.44 billion 0.03 -$37.89 million ($1.82) -0.96

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

Dividends

Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 11.4%. Genesco does not pay a dividend. Stage Stores pays out -11.0% of its earnings in the form of a dividend. Genesco has increased its dividend for 8 consecutive years.

Summary

Genesco beats Stage Stores on 11 of the 16 factors compared between the two stocks.

Genesco Company Profile

Genesco Inc. is a retailer and wholesaler of footwear, apparel and accessories. The Company operates in five segments: Journeys Group, Schuh Group, Lids Sports Group, Johnston & Murphy Group and Licensed Brands. It relies on independent third-party manufacturers for production of its footwear products sold at wholesale. It sources footwear and accessory products from foreign manufacturers located in Bangladesh, Brazil, Cambodia, Canada, China, Dominican Republic, El Salvador, France, Germany, Hong Kong, India, Indonesia, Italy, Mexico, the Netherlands, Portugal, Peru, Romania, Taiwan and Vietnam. As of January 28, 2017, it operated 2,794 retail footwear, headwear and sports apparel and accessory stores and leased departments located primarily throughout the United States and in Puerto Rico, including 147 headwear and sports apparel and accessory stores and 87 footwear stores in Canada and 128 footwear stores in the United Kingdom, the Republic of Ireland and Germany.

Stage Stores Company Profile

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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