Head-To-Head Contrast: Rent the Runway (NASDAQ:RENT) versus Cato (NYSE:CATO)

Cato (NYSE:CATO) and Rent the Runway (NASDAQ:RENT) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Earnings and Valuation

This table compares Cato and Rent the Runway”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cato	$653.81 million	0.10	-$5.91 million	($0.01)	-329.00
Rent the Runway	$329.80 million	0.31	$22.60 million	$6.49	0.46

Rent the Runway has lower revenue, but higher earnings than Cato. Cato is trading at a lower price-to-earnings ratio than Rent the Runway, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Cato and Rent the Runway, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cato	1	0	0	0	1.00
Rent the Runway	1	0	0	0	1.00

Volatility & Risk

Cato has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Rent the Runway has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Profitability

This table compares Cato and Rent the Runway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cato	0.01%	0.05%	0.02%
Rent the Runway	8.51%	N/A	-30.10%

Institutional & Insider Ownership

61.1% of Cato shares are owned by institutional investors. Comparatively, 73.1% of Rent the Runway shares are owned by institutional investors. 18.3% of Cato shares are owned by insiders. Comparatively, 0.4% of Rent the Runway shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Rent the Runway beats Cato on 7 of the 11 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 Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.