Michael Kors Holdings Limited (NYSE: KORS) and Carter’s (NYSE:CRI) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Dividends

Carter’s pays an annual dividend of $1.48 per share and has a dividend yield of 1.6%. Michael Kors Holdings Limited does not pay a dividend. Carter’s pays out 29.1% of its earnings in the form of a dividend. Michael Kors Holdings Limited has raised its dividend for 3 consecutive years.

Risk and Volatility

Michael Kors Holdings Limited has a beta of 0.02, suggesting that its stock price is 98% less volatile than the S&P 500. Comparatively, Carter’s has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.

Institutional and Insider Ownership

83.4% of Michael Kors Holdings Limited shares are owned by institutional investors. Comparatively, 97.1% of Carter’s shares are owned by institutional investors. 6.0% of Michael Kors Holdings Limited shares are owned by insiders. Comparatively, 3.1% of Carter’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Michael Kors Holdings Limited and Carter’s’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Michael Kors Holdings Limited $4.46 billion 1.62 $1.07 billion $3.22 14.84
Carter’s $3.26 billion 1.36 $494.84 million $5.09 18.24

Michael Kors Holdings Limited has higher revenue and earnings than Carter’s. Michael Kors Holdings Limited is trading at a lower price-to-earnings ratio than Carter’s, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Michael Kors Holdings Limited and Carter’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Michael Kors Holdings Limited 3 18 6 0 2.11
Carter’s 0 3 9 0 2.75

Michael Kors Holdings Limited currently has a consensus price target of $44.92, suggesting a potential downside of 5.97%. Carter’s has a consensus price target of $103.10, suggesting a potential upside of 11.03%. Given Carter’s’ stronger consensus rating and higher possible upside, analysts plainly believe Carter’s is more favorable than Michael Kors Holdings Limited.

Profitability

This table compares Michael Kors Holdings Limited and Carter’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Michael Kors Holdings Limited 11.91% 40.26% 26.12%
Carter’s 7.74% 33.18% 13.13%

Summary

Michael Kors Holdings Limited beats Carter’s on 9 of the 17 factors compared between the two stocks.

Michael Kors Holdings Limited Company Profile

Michael Kors Holdings Limited is a designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks MICHAEL KORS, MICHAEL MICHAEL KORS, and various other related trademarks and logos. The Company operates through three segments: retail, wholesale and licensing. The Retail operations consist of collection stores and lifestyle stores, including concessions and outlet stores, located primarily in the Americas (the United States, Canada and Latin America), Europe and Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the Americas, Europe and Asia. The Company licenses its trademarks on products, such as fragrances, beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties, as well as through geographic licenses.

Carter’s Company Profile

Carter’s, Inc. (Carter’s) is a marketer of apparel for babies and young children in the United States and Canada. The Company owns two brand names in the children’s apparel industry, Carter’s and OshKosh B’gosh (OshKosh). The Company operates through five segments: Carter’s Retail, Carter’s Wholesale, OshKosh Retail, OshKosh Wholesale and International. Its International segment includes company-operated retail stores and online Websites, wholesale operations, and royalty income from its international licensees. It markets products for consumers, and offer various product categories, including baby, sleepwear, play clothes, and related accessories. Its multi-channel international business model – retail stores, online and wholesale – enables it to reach a range of consumers around the world. As of December 31, 2016, its channels included approximately 18,000 wholesale locations, 792 stores in the United States, 164 stores in Canada, and its Canadian and the United States Websites.

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