Rent the Runway (NASDAQ:RENT – Get Free Report) and Cato (NYSE:CATO – Get Free Report) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.
Earnings & Valuation
This table compares Rent the Runway and Cato”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Rent the Runway | $329.80 million | 0.37 | $22.60 million | $6.49 | 0.56 |
| Cato | $653.81 million | 0.10 | -$5.91 million | ($0.01) | -340.50 |
Analyst Recommendations
This is a summary of current ratings and price targets for Rent the Runway and Cato, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rent the Runway | 1 | 0 | 0 | 0 | 1.00 |
| Cato | 1 | 0 | 0 | 0 | 1.00 |
Profitability
This table compares Rent the Runway and Cato’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Rent the Runway | 8.51% | N/A | -30.10% |
| Cato | 0.01% | 0.05% | 0.02% |
Risk and Volatility
Rent the Runway has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Cato has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.
Insider and Institutional Ownership
73.1% of Rent the Runway shares are owned by institutional investors. Comparatively, 61.1% of Cato shares are owned by institutional investors. 0.4% of Rent the Runway shares are owned by company insiders. Comparatively, 18.3% of Cato shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds 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 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.
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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