Francesca's (FRAN) & Citi Trends (CTRN) Critical Analysis

Francesca's (NASDAQ: FRAN) and Citi Trends (NASDAQ:CTRN) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Volatility and Risk

Francesca's has a beta of 0.23, suggesting that its share price is 77% less volatile than the S&P 500. Comparatively, Citi Trends has a beta of 0.51, suggesting that its share price is 49% 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%. Francesca's does not pay a dividend. Citi Trends pays out 31.7% of its earnings in the form of a dividend.

Profitability

This table compares Francesca's and Citi Trends’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Francesca's 5.52% 23.19% 13.64%
Citi Trends 2.04% 7.70% 5.14%

Valuation & Earnings

This table compares Francesca's and Citi Trends’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Francesca's $487.19 million 0.43 $42.00 million $0.72 8.08
Citi Trends $695.17 million 0.49 $13.33 million $1.01 24.79

Francesca's has higher earnings, but lower revenue than Citi Trends. Francesca's is trading at a lower price-to-earnings ratio than Citi Trends, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

86.5% of Citi Trends shares are held by institutional investors. 1.2% of Francesca's shares are held by insiders. Comparatively, 4.6% of Citi Trends shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Francesca's and Citi Trends, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Francesca's 0 6 1 0 2.14
Citi Trends 0 0 0 0 N/A

Francesca's presently has a consensus target price of $10.67, suggesting a potential upside of 83.28%. Given Francesca's’ higher probable upside, analysts clearly believe Francesca's is more favorable than Citi Trends.

Summary

Citi Trends beats Francesca's on 8 of the 15 factors compared between the two stocks.

About Francesca's

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

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.

Receive News & Ratings for Francesca's Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Francesca's and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply