Stage Stores (NYSE: SSI) and Francesca’s Holdings Corporation (NASDAQ:FRAN) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Risk & Volatility

Stage Stores has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Francesca’s Holdings Corporation has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500.

Institutional & Insider Ownership

62.5% of Stage Stores shares are held by institutional investors. 7.4% of Stage Stores shares are held by insiders. Comparatively, 1.2% of Francesca’s Holdings Corporation 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.

Earnings and Valuation

This table compares Stage Stores and Francesca’s Holdings Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Stage Stores $1.46 billion 0.03 $28.34 million ($1.76) -1.00
Francesca’s Holdings Corporation $488.76 million 0.58 $83.79 million $1.04 7.37

Francesca’s Holdings Corporation has higher revenue, but lower earnings than Stage Stores. Stage Stores is trading at a lower price-to-earnings ratio than Francesca’s Holdings Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Stage Stores and Francesca’s Holdings Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stage Stores 1 2 0 0 1.67
Francesca’s Holdings Corporation 0 6 2 0 2.25

Stage Stores presently has a consensus price target of $2.00, suggesting a potential upside of 13.64%. Francesca’s Holdings Corporation has a consensus price target of $14.14, suggesting a potential upside of 84.63%. Given Francesca’s Holdings Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Francesca’s Holdings Corporation is more favorable than Stage Stores.

Profitability

This table compares Stage Stores and Francesca’s Holdings Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stage Stores -3.27% -7.78% -3.29%
Francesca’s Holdings Corporation 8.03% 36.12% 21.39%

Dividends

Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 11.4%. Francesca’s Holdings Corporation 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.

Summary

Francesca’s Holdings Corporation beats Stage Stores on 9 of the 16 factors compared between the two stocks.

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.

About Francesca’s Holdings Corporation

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.

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