O’Reilly Automotive (NASDAQ:ORLY – Get Free Report) and Cato (NYSE:CATO – Get Free Report) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.
Volatility & Risk
O’Reilly Automotive has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Cato has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.
Profitability
This table compares O’Reilly Automotive and Cato’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| O’Reilly Automotive | 14.27% | -232.45% | 15.79% |
| Cato | -0.87% | -3.39% | -1.29% |
Insider & Institutional Ownership
85.0% of O’Reilly Automotive shares are held by institutional investors. Comparatively, 61.1% of Cato shares are held by institutional investors. 0.8% of O’Reilly Automotive shares are held by company insiders. Comparatively, 18.3% of Cato shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Analyst Ratings
This is a breakdown of current recommendations and price targets for O’Reilly Automotive and Cato, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| O’Reilly Automotive | 0 | 3 | 17 | 0 | 2.85 |
| Cato | 1 | 0 | 0 | 0 | 1.00 |
O’Reilly Automotive currently has a consensus target price of $108.11, indicating a potential upside of 20.00%. Given O’Reilly Automotive’s stronger consensus rating and higher possible upside, equities analysts clearly believe O’Reilly Automotive is more favorable than Cato.
Valuation & Earnings
This table compares O’Reilly Automotive and Cato”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| O’Reilly Automotive | $17.78 billion | 4.10 | $2.54 billion | $3.14 | 28.69 |
| Cato | $653.81 million | 0.07 | -$5.91 million | ($0.30) | -7.97 |
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.
Summary
O’Reilly Automotive beats Cato on 11 of the 14 factors compared between the two stocks.
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.
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.
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