Comparing Steven Madden (NASDAQ:SHOO) & Carter’s (NYSE:CRI)

Carter’s (NYSE:CRI) and Steven Madden (NASDAQ:SHOO) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.

Dividends

Carter’s pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. Steven Madden pays an annual dividend of $0.84 per share and has a dividend yield of 3.2%. Carter’s pays out 22.1% of its earnings in the form of a dividend. Steven Madden pays out 36.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk & Volatility

Carter’s has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, Steven Madden has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Carter’s and Steven Madden, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carter’s	3	2	0	0	1.40
Steven Madden	0	8	0	0	2.00

Carter’s currently has a consensus price target of $36.80, indicating a potential upside of 16.86%. Steven Madden has a consensus price target of $28.50, indicating a potential upside of 9.66%. Given Carter’s’ higher possible upside, equities research analysts plainly believe Carter’s is more favorable than Steven Madden.

Valuation & Earnings

This table compares Carter’s and Steven Madden”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carter’s	$2.81 billion	0.41	$185.51 million	$4.52	6.97
Steven Madden	$2.28 billion	0.83	$169.39 million	$2.32	11.20

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

Insider & Institutional Ownership

99.9% of Steven Madden shares are held by institutional investors. 2.0% of Carter’s shares are held by insiders. Comparatively, 2.2% of Steven Madden shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Carter’s and Steven Madden’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carter’s	5.80%	23.50%	8.27%
Steven Madden	7.26%	21.63%	13.24%

Summary

Steven Madden beats Carter’s on 9 of the 15 factors compared between the two stocks.

About Carter’s

Carter’s, Inc. engages in the business of brand marketing of young children’s apparel. It operates through the following segments: the United States (US) Retail, US Wholesale, and International. The US Retail segment includes selling products through retail stores and ecommerce websites. The US Wholesale segment focuses on wholesale partners. The International segment is involved in selling in retail stores and ecommerce websites in Canada and Mexico, and to international wholesale customers and licensees. The company was founded by William Carter in 1865 and is headquartered in Atlanta, GA.

About Steven Madden

Steven Madden, Ltd. designs, sources, and markets fashion-forward branded and private label footwear, accessories, and apparel in the United States and internationally. It operates through Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to- Consumer, and Licensing segments. The Wholesale Footwear segment designs, sources, and markets various products, including dress shoes, boots, booties, fashion sneakers, sandals, and casual shoes under the Steve Madden, Dolce Vita, Betsey Johnson, Blondo, GREATS, and Anne Klein brands. The Wholesale Accessories/Apparel segment offers handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting, and other accessories under the Steve Madden, Anne Klein, Betsey Johnson, and Dolce Vita brands. The Direct-to-Consumer segment operates Steve Madden and Dolce Vita full-price retail stores, Steve Madden outlet stores and concessions, and digital e-commerce websites. The Licensing segment engages in the licensing of the Steve Madden and Betsey Johnson trademarks for the sale of select apparel, accessory, home categories, and other non-core products. In addition, the company distributes its products in the wholesale channel through department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs. Further, it markets its products and services through digital brand marketing, social media and influencer marketing, experiential events, in-store and online promotions, and public relations. The company was incorporated in 1990 and is headquartered in Long Island City, New York.