Analyzing Citi Trends (CTRN) & Sequential Brands Group (SQBG)

Citi Trends (NASDAQ: CTRN) and Sequential Brands Group (NASDAQ:SQBG) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Profitability

This table compares Citi Trends and Sequential Brands Group’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%
Sequential Brands Group -14.35% 2.26% 0.85%

Analyst Recommendations

This is a summary of current ratings for Citi Trends and Sequential Brands Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Citi Trends 0 0 0 0 N/A
Sequential Brands Group 0 4 3 0 2.43

Sequential Brands Group has a consensus target price of $6.92, suggesting a potential upside of 311.71%. Given Sequential Brands Group’s higher probable upside, analysts clearly believe Sequential Brands Group is more favorable than Citi Trends.

Earnings and Valuation

This table compares Citi Trends and Sequential Brands Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Citi Trends $695.17 million 0.48 $13.33 million $1.02 23.85
Sequential Brands Group $155.53 million 0.68 -$820,000.00 ($0.38) -4.42

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

Volatility & Risk

Citi Trends has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, Sequential Brands Group has a beta of 0.42, indicating that its stock price is 58% 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 1.3%. Sequential Brands Group does not pay a dividend. Citi Trends pays out 31.4% of its earnings in the form of a dividend.

Insider & Institutional Ownership

86.5% of Citi Trends shares are held by institutional investors. Comparatively, 50.3% of Sequential Brands Group shares are held by institutional investors. 4.6% of Citi Trends shares are held by insiders. Comparatively, 27.3% of Sequential Brands Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Citi Trends beats Sequential Brands Group on 10 of the 15 factors compared between the two stocks.

About Citi Trends

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.

About Sequential Brands Group

Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.

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