Stage Stores (SSI) & Foot Locker (FL) Critical Comparison

Stage Stores (NYSE: SSI) and Foot Locker (NYSE:FL) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

53.4% of Stage Stores shares are owned by institutional investors. Comparatively, 88.1% of Foot Locker shares are owned by institutional investors. 7.4% of Stage Stores shares are owned by insiders. Comparatively, 2.9% of Foot Locker 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.

Dividends

Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 10.3%. Foot Locker pays an annual dividend of $1.24 per share and has a dividend yield of 2.8%. Stage Stores pays out -11.0% of its earnings in the form of a dividend. Foot Locker pays out 31.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Stage Stores has increased its dividend for 6 consecutive years and Foot Locker has increased its dividend for 7 consecutive years. Stage Stores is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Stage Stores and Foot Locker’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stage Stores -3.33% -8.67% -3.56%
Foot Locker 6.79% 19.96% 14.29%

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stage Stores $1.44 billion 0.04 -$37.89 million ($1.82) -1.07
Foot Locker $7.77 billion 0.72 $664.00 million $3.98 11.30

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

Risk & Volatility

Stage Stores has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500. Comparatively, Foot Locker has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Stage Stores and Foot Locker, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stage Stores 1 2 0 0 1.67
Foot Locker 1 14 9 0 2.33

Stage Stores presently has a consensus target price of $1.00, indicating a potential downside of 48.72%. Foot Locker has a consensus target price of $51.13, indicating a potential upside of 13.70%. Given Foot Locker’s stronger consensus rating and higher probable upside, analysts clearly believe Foot Locker is more favorable than Stage Stores.

Summary

Foot Locker beats Stage Stores on 12 of the 16 factors compared between the two stocks.

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.

Foot Locker Company Profile

Foot Locker, Inc. is a retailer of shoes and apparel. The Company operates through two segments: Athletic Stores and Direct-to-Customers. The Company is an athletic footwear and apparel retailer, which include businesses, such as include Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep and SIX:02. The Direct-to-Customers segment is multi-branded and sells directly to customers through Internet and mobile sites and catalogs. The Direct-to-Customers segment operates the Websites for eastbay.com, final-score.com, eastbayteamsales.com and sp24.com. Additionally, this segment includes the Websites, both desktop and mobile, aligned with the brand names of its store banners (footlocker.com, ladyfootlocker.com, six02.com kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, runnerspoint.com and sidestep-shoes.com).

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