Sequential Brands Group (NASDAQ: SQBG) and Stage Stores (NYSE:SSI) 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 valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.
Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 10.9%. Sequential Brands Group does not pay a dividend. Stage Stores pays out -11.4% of its earnings in the form of a dividend. Stage Stores has raised its dividend for 7 consecutive years.
Earnings and Valuation
This table compares Sequential Brands Group and Stage Stores’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sequential Brands Group||$168.91 million||1.07||$101.48 million||$0.02||144.32|
|Stage Stores||$1.46 billion||0.03||$29.42 million||($1.76)||-1.05|
Sequential Brands Group has higher revenue, but lower earnings than Stage Stores. Stage Stores is trading at a lower price-to-earnings ratio than Sequential Brands Group, indicating that it is currently the more affordable of the two stocks.
This table compares Sequential Brands Group and Stage Stores’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sequential Brands Group||0.99%||1.29%||0.49%|
Volatility & Risk
Sequential Brands Group has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Stage Stores has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.
This is a summary of current recommendations and price targets for Sequential Brands Group and Stage Stores, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sequential Brands Group||0||2||4||0||2.67|
Sequential Brands Group presently has a consensus target price of $8.20, suggesting a potential upside of 184.23%. Stage Stores has a consensus target price of $2.00, suggesting a potential upside of 8.70%. Given Sequential Brands Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Sequential Brands Group is more favorable than Stage Stores.
Institutional & Insider Ownership
51.9% of Sequential Brands Group shares are held by institutional investors. Comparatively, 62.2% of Stage Stores shares are held by institutional investors. 27.3% of Sequential Brands Group shares are held by company insiders. Comparatively, 7.4% of Stage Stores shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Sequential Brands Group beats Stage Stores on 10 of the 16 factors compared between the two stocks.
About Sequential Brands Group
Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.
About Stage Stores
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.
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