Analyzing Genesco (NYSE:GCO) & Ross Stores (ROST)

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

Volatility and Risk

Genesco has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 0.8%. Genesco does not pay a dividend. Ross Stores pays out 20.4% of its earnings in the form of a dividend. Ross Stores has increased its dividend for 10 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Genesco 2.43% 7.36% 4.34%
Ross Stores 8.93% 43.21% 21.90%

Insider & Institutional Ownership

97.7% of Genesco shares are owned by institutional investors. Comparatively, 91.0% of Ross Stores shares are owned by institutional investors. 3.3% of Genesco shares are owned by company insiders. Comparatively, 2.3% of Ross Stores shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Genesco and Ross Stores, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genesco 0 4 3 0 2.43
Ross Stores 0 7 15 0 2.68

Genesco presently has a consensus price target of $33.29, indicating a potential upside of 30.28%. Ross Stores has a consensus price target of $74.53, indicating a potential downside of 1.59%. Given Genesco’s higher probable upside, equities analysts clearly believe Genesco is more favorable than Ross Stores.

Valuation & Earnings

This table compares Genesco and Ross 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 0.18 $97.43 million $3.53 7.24
Ross Stores $12.87 billion 2.27 $1.12 billion $3.13 24.19

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

Summary

Ross Stores beats Genesco on 11 of the 17 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.

Ross Stores Company Profile

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

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