Head-To-Head Review: The Children’s Place (PLCE) & Stage Stores (SSI)

The Children’s Place (NASDAQ: PLCE) and Stage Stores (NYSE:SSI) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, earnings, risk, dividends, valuation, analyst recommendations and profitability.

Dividends

The Children’s Place pays an annual dividend of $2.00 per share and has a dividend yield of 1.6%. Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 6.8%. The Children’s Place pays out 25.3% of its earnings in the form of a dividend. Stage Stores pays out -23.5% 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. Stage Stores is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

52.7% of Stage Stores shares are held by institutional investors. 3.8% of The Children’s Place shares are held by insiders. Comparatively, 9.4% of Stage Stores shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares The Children’s Place and Stage Stores’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Children’s Place $1.87 billion 1.12 $84.69 million $7.91 16.06
Stage Stores $1.59 billion 0.05 -$37.32 million ($0.85) -3.47

The Children’s Place has higher revenue and earnings than Stage Stores. Stage Stores is trading at a lower price-to-earnings ratio than The Children’s Place, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations for The Children’s Place and Stage Stores, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Children’s Place 1 2 10 0 2.69
Stage Stores 1 0 0 0 1.00

The Children’s Place currently has a consensus price target of $145.09, suggesting a potential upside of 14.22%. Stage Stores has a consensus price target of $1.00, suggesting a potential downside of 66.10%. Given The Children’s Place’s stronger consensus rating and higher possible upside, equities analysts clearly believe The Children’s Place is more favorable than Stage Stores.

Risk and Volatility

The Children’s Place has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, Stage Stores has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares The Children’s Place and Stage Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Children’s Place 4.53% 29.03% 15.12%
Stage Stores -2.34% -6.61% -2.64%

Summary

The Children’s Place beats Stage Stores on 11 of the 16 factors compared between the two stocks.

The Children’s Place Company Profile

The Children's Place, Inc. operates as a children's specialty apparel retailer. The company operates in two segments, The Children's Place U.S. and The Children's Place International. It sells apparel, accessories, footwear, and other items for children; and designs, contracts to manufacture, and sells merchandise under the proprietary The Children's Place, Place, and Baby Place brand names. As of February 3, 2018, the company operated 1,014 stores in the United States, Canada, and Puerto Rico; and 190 international points of distribution operated by its 7 franchise partners in 19 countries. It also sells its products through childrensplace.com, an online store. The company was formerly known as The Children's Place Retail Stores, Inc. and changed its name to The Children's Place, Inc. in June 2014. The Children's Place, Inc. was founded in 1969 and is headquartered in Secaucus, New Jersey.

Stage Stores Company Profile

Stage Stores, Inc. operates specialty department stores primarily in small and mid-sized towns and communities in the United States. Its merchandise portfolio comprises moderately priced brand name and private label apparel, accessories, cosmetics, footwear, and home goods. The company also offers merchandise direct-to-consumer through its e-commerce Website and send program. As of September 27, 2017, it operated 792 specialty department stores in 42 states under the BEALLS, GOODY'S, PALAIS ROYAL, PEEBLES, and STAGE names; 58 GORDMANS off-price stores; and stage.com, an e-commerce Website. The company was founded in 1988 and is headquartered in Houston, Texas.

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