Head to Head Review: Sequential Brands Group (SQBG) versus Stein Mart (SMRT)

Sequential Brands Group (NASDAQ: SQBG) and Stein Mart (NASDAQ:SMRT) 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 dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Dividends

Stein Mart pays an annual dividend of $0.08 per share and has a dividend yield of 6.9%. Sequential Brands Group does not pay a dividend. Stein Mart pays out -12.9% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Sequential Brands Group and Stein Mart’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sequential Brands Group $155.53 million 0.72 -$820,000.00 ($0.38) -4.68
Stein Mart $1.36 billion 0.04 $400,000.00 ($0.62) -1.87

Stein Mart has higher revenue and earnings than Sequential Brands Group. Sequential Brands Group is trading at a lower price-to-earnings ratio than Stein Mart, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

50.3% of Sequential Brands Group shares are owned by institutional investors. Comparatively, 20.0% of Stein Mart shares are owned by institutional investors. 27.3% of Sequential Brands Group shares are owned by company insiders. Comparatively, 34.7% of Stein Mart shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for Sequential Brands Group and Stein Mart, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sequential Brands Group 0 4 3 0 2.43
Stein Mart 0 0 0 0 N/A

Sequential Brands Group presently has a consensus target price of $6.92, suggesting a potential upside of 288.58%. Given Sequential Brands Group’s higher possible upside, analysts plainly believe Sequential Brands Group is more favorable than Stein Mart.

Profitability

This table compares Sequential Brands Group and Stein Mart’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sequential Brands Group -14.35% 2.26% 0.85%
Stein Mart -2.18% -44.60% -5.30%

Risk & Volatility

Sequential Brands Group has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500. Comparatively, Stein Mart has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.

Summary

Stein Mart beats Sequential Brands Group on 8 of the 15 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 Stein Mart

Stein Mart, Inc. is a national retailer offering the fashion merchandise, service and presentation of a department or specialty store. The Company offers apparel for women and men, as well as accessories, shoes and home fashions. The Company’s target customers are women over 45 years old. The Company operates approximately 280 stores in over 30 states and an Internet store. Its stores are located in the Northeast, Midwest, Southeast, Texas and the Southwest. It is concentrated in the Southeast and Texas where over 180 of its stores are located. The Company’s stores offer a range of services, such as merchandise locator service, a Preferred Customer program, co-branded and private label credit card programs, and electronic gift cards. The Company’s merchants purchase products from approximately 1,200 vendors. It leases all of its store locations, generally for approximately 10 years with options to extend the lease term for over two or five year periods.

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