Cato (NYSE:CATO) vs. O’Reilly Automotive (NASDAQ:ORLY) Head-To-Head Analysis

Cato (NYSE:CATO) and O’Reilly Automotive (NASDAQ:ORLY) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Analyst Ratings

This is a summary of current ratings and target prices for Cato and O’Reilly Automotive, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	1	0	0	0	1.00
O’Reilly Automotive	0	3	16	1	2.90

O’Reilly Automotive has a consensus price target of $107.89, indicating a potential upside of 22.44%. Given O’Reilly Automotive’s stronger consensus rating and higher probable upside, analysts clearly believe O’Reilly Automotive is more favorable than Cato.

Volatility & Risk

Cato has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, O’Reilly Automotive has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.

Institutional and Insider Ownership

61.1% of Cato shares are held by institutional investors. Comparatively, 85.0% of O’Reilly Automotive shares are held by institutional investors. 18.3% of Cato shares are held by insiders. Comparatively, 0.8% of O’Reilly Automotive shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Cato and O’Reilly Automotive”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$653.81 million	0.07	-$5.91 million	($0.30)	-7.67
O’Reilly Automotive	$17.78 billion	4.01	$2.54 billion	$3.26	27.03

O’Reilly Automotive has higher revenue and earnings than Cato. Cato is trading at a lower price-to-earnings ratio than O’Reilly Automotive, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cato and O’Reilly Automotive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cato	-0.87%	-3.39%	-1.29%
O’Reilly Automotive	14.27%	-188.24%	15.83%

Summary

O’Reilly Automotive beats Cato on 12 of the 15 factors compared between the two stocks.

About Cato

The Cato Corporation, together with its subsidiaries, operates as a specialty retailer of fashion apparel and accessories primarily in the southeastern United States. It operates through two segments, Retail and Credit. The company's stores and e-commerce websites offer a range of apparel and accessories, including dressy, career, and casual sportswear; and dresses, coats, shoes, lingerie, costume jewelry, and handbags, as well as men's wear, and lines for kids and infants. It operates its stores and e-commerce websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. It also provides credit card services to its customers, as well as layaway plans for customers. The Cato Corporation was incorporated in 1946 and is headquartered in Charlotte, North Carolina.

About O’Reilly Automotive

O’Reilly Automotive, Inc., together with its subsidiaries, operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, and Mexico. The company provides new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting products, and oil and wiper blades; and accessories, including floor mats, seat covers, and truck accessories. It also offers auto body paint and related materials, automotive tools, and professional service provider service equipment. In addition, the company provide enhanced services and programs comprising used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; and professional paint shop mixing and related materials. Further, it offers do-it-yourself and professional service for domestic and imported automobiles, vans, and trucks. The company was founded in 1957 and is headquartered in Springfield, Missouri.