Critical Review: Genesco (GCO) and Express (EXPR)

Genesco (NYSE: GCO) and Express (NYSE:EXPR) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Profitability

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

Net Margins Return on Equity Return on Assets
Genesco -4.24% 6.93% 4.03%
Express 0.60% 3.85% 2.03%

Analyst Recommendations

This is a breakdown of recent recommendations for Genesco and Express, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genesco 0 4 4 0 2.50
Express 0 9 0 0 2.00

Genesco currently has a consensus price target of $36.25, suggesting a potential downside of 0.41%. Express has a consensus price target of $9.05, suggesting a potential upside of 21.48%. Given Express’ higher possible upside, analysts clearly believe Express is more favorable than Genesco.

Institutional & Insider Ownership

97.7% of Genesco shares are owned by institutional investors. Comparatively, 99.1% of Express shares are owned by institutional investors. 3.3% of Genesco shares are owned by insiders. Comparatively, 2.6% of Express shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Genesco and Express’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Genesco $2.87 billion 0.25 $97.43 million ($6.33) -5.75
Express $2.19 billion 0.27 $57.41 million $0.16 46.57

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

Volatility and Risk

Genesco has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, Express has a beta of 1.55, indicating that its share price is 55% more volatile than the S&P 500.

About Genesco

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.

About Express

Express, Inc. is a specialty apparel and accessories retailer offering both women’s and men’s merchandise. The Company targets women and men between 20 and 30 years old. It offers an assortment of fashionable apparel and accessories to address fashion needs across multiple aspects of lifestyles, including work, casual, jeanswear and going-out occasions. It is engaged in the operation of its brick-and-mortar retail and outlet stores, e-commerce operations and franchise operations. It sells its products through its e-commerce Website, www.express.com and its mobile application, and has franchise agreements with franchisees that operate Express locations in Latin America. It operated 656 stores across the United States, in Canada and in Puerto Rico, including 104 factory outlet stores, as of January 28, 2017. Its products are created by its in-house design team. Its portfolio of apparel products includes brands, such as Portofino shirt, Editor pant and 1MX shirt.

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