Destination Maternity (DEST) and Chico’s (CHS) Financial Review

Destination Maternity (NASDAQ: DEST) and Chico’s (NYSE:CHS) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Institutional & Insider Ownership

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31.3% of Destination Maternity shares are owned by institutional investors. Comparatively, 99.5% of Chico’s shares are owned by institutional investors. 2.7% of Destination Maternity shares are owned by insiders. Comparatively, 3.0% of Chico’s shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Chico’s pays an annual dividend of $0.34 per share and has a dividend yield of 3.4%. Destination Maternity does not pay a dividend. Chico’s pays out 50.0% of its earnings in the form of a dividend. Chico’s has raised its dividend for 8 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and target prices for Destination Maternity and Chico’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Destination Maternity 0 0 0 0 N/A
Chico’s 1 8 4 0 2.23

Chico’s has a consensus target price of $11.00, indicating a potential upside of 10.89%. Given Chico’s’ higher possible upside, analysts clearly believe Chico’s is more favorable than Destination Maternity.

Risk & Volatility

Destination Maternity has a beta of -0.09, meaning that its share price is 109% less volatile than the S&P 500. Comparatively, Chico’s has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.

Earnings and Valuation

This table compares Destination Maternity and Chico’s’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Destination Maternity $433.70 million 0.09 -$32.76 million N/A N/A
Chico’s $2.28 billion 0.56 $101.00 million $0.68 14.59

Chico’s has higher revenue and earnings than Destination Maternity.

Profitability

This table compares Destination Maternity and Chico’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Destination Maternity -11.02% -14.66% -4.96%
Chico’s 4.43% 13.79% 8.02%

Summary

Chico’s beats Destination Maternity on 13 of the 14 factors compared between the two stocks.

About Destination Maternity

Destination Maternity Corporation, formerly Mothers Work, Inc. is a designer and retailer of maternity apparel in the United States. The Company operates a chain of maternity apparel specialty stores. The Company operates through the design, manufacture, and sale of maternity apparel and related accessories segment. It operates approximately 1,815 retail locations, including over 540 stores in the United States, Canada and Puerto Rico, and approximately 1,280 leased departments located within department stores and baby specialty stores throughout the United States, in Puerto Rico and, in England. The Company sells merchandise on the Internet, primarily through its Motherhood.com, APeaInThePod.com and DestinationMaternity.com Websites. The Company also sells its merchandise through its Canadian Website, MotherhoodCanada.ca, through Amazon.com in the United States, and through Websites of certain of its retail partners.

About Chico’s

Chico's FAS, Inc. operates as an omni-channel specialty retailer of women's private branded, casual-to-dressy clothing, intimates, and complementary accessories. The company's portfolio of brands consists of the Chico's, White House Black Market (WHBM), and Soma. The Chico's brand primarily sells private branded clothing focusing on women 45 and older. The WHBM brand sells private branded clothing and accessories, such as shoes, belts, scarves, handbags, and jewelry focusing on women who are 35 years and older. The Soma brand sells designed private branded lingerie, sleepwear, loungewear, activewear, swimwear, and beauty products focusing on women who are 35 and older. As of February 3, 2018, it operated 1,460 retail stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada. The company also sells through its Websites and catalogs. Chico's FAS, Inc. was founded in 1983 and is headquartered in Fort Myers, Florida.

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