ON (NYSE:ONON – Get Free Report) and Cato (NYSE:CATO – Get Free Report) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, valuation and profitability.
Volatility and Risk
ON has a beta of 2.09, indicating that its share price is 109% more volatile than the S&P 500. Comparatively, Cato has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.
Earnings and Valuation
This table compares ON and Cato”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| ON | $3.64 billion | 6.87 | $245.87 million | $0.93 | 42.12 |
| Cato | $653.81 million | 0.10 | -$5.91 million | ($0.31) | -11.05 |
ON has higher revenue and earnings than Cato. Cato is trading at a lower price-to-earnings ratio than ON, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares ON and Cato’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ON | 7.92% | 15.72% | 8.99% |
| Cato | -0.90% | -3.57% | -1.35% |
Insider and Institutional Ownership
36.4% of ON shares are held by institutional investors. Comparatively, 61.1% of Cato shares are held by institutional investors. 68.6% of ON shares are held by insiders. Comparatively, 18.3% of Cato shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Analyst Ratings
This is a summary of recent recommendations for ON and Cato, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ON | 1 | 4 | 15 | 2 | 2.82 |
| Cato | 1 | 0 | 0 | 0 | 1.00 |
ON presently has a consensus target price of $55.05, suggesting a potential upside of 40.55%. Given ON’s stronger consensus rating and higher possible upside, equities analysts clearly believe ON is more favorable than Cato.
Summary
ON beats Cato on 14 of the 15 factors compared between the two stocks.
About ON
On Holding AG engages in the development and distribution of sports products such as footwear, apparel, and accessories for high-performance running, outdoor, all-day activities, and tennis. It sells its products worldwide through independent retailers and global distributors, its own online presence, and its own stores. The company was founded by David Allemann, Olivier Bernhard, and Caspar Coppetti in January 2010 and is headquartered in Zurich, Switzerland.
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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