Financial Comparison: Cato (NYSE:CATO) and Lulu’s Fashion Lounge (NASDAQ:LVLU)

Cato (NYSE:CATO) and Lulu’s Fashion Lounge (NASDAQ:LVLU) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, profitability, earnings, institutional ownership and valuation.

Volatility & Risk

Cato has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, Lulu’s Fashion Lounge has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.

Insider and Institutional Ownership

61.1% of Cato shares are owned by institutional investors. Comparatively, 73.8% of Lulu’s Fashion Lounge shares are owned by institutional investors. 18.3% of Cato shares are owned by company insiders. Comparatively, 6.8% of Lulu’s Fashion Lounge shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Cato and Lulu’s Fashion Lounge’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cato	0.01%	0.05%	0.02%
Lulu’s Fashion Lounge	-3.56%	-423.50%	-9.95%

Analyst Recommendations

This is a summary of recent ratings and target prices for Cato and Lulu’s Fashion Lounge, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	1	0	0	0	1.00
Lulu’s Fashion Lounge	1	0	0	0	1.00

Earnings & Valuation

This table compares Cato and Lulu’s Fashion Lounge”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$653.81 million	0.09	-$5.91 million	($0.01)	-310.30
Lulu’s Fashion Lounge	$275.66 million	0.10	-$13.71 million	($3.50)	-2.80

Cato has higher revenue and earnings than Lulu’s Fashion Lounge. Cato is trading at a lower price-to-earnings ratio than Lulu’s Fashion Lounge, indicating that it is currently the more affordable of the two stocks.

Summary

Cato beats Lulu’s Fashion Lounge on 8 of the 11 factors compared between the two stocks.

About Cato

The Cato Corporation, together with its subsidiaries, operates as a specialty retailer of fashion apparel and accessories primarily in the southeastern United States. It operates through two segments, Retail and Credit. The company's stores and e-commerce websites offer a range of apparel and accessories, including dressy, career, and casual sportswear; and dresses, coats, shoes, lingerie, costume jewelry, and handbags, as well as men's wear, and lines for kids and infants. It operates its stores and e-commerce websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. It also provides credit card services to its customers, as well as layaway plans for customers. The Cato Corporation was incorporated in 1946 and is headquartered in Charlotte, North Carolina.

About Lulu’s Fashion Lounge

Lulu’s Fashion Lounge Holdings, Inc. engages in providing an online website for clothing. It offers retailing of women’s clothing, shoes, and accessories. The company was founded in 1996 and is headquartered in Chico, CA.