NYSE:CATO

Stock Analysis Report

Executive Summary

The Cato Corporation, together with its subsidiaries, operates as a specialty retailer of fashion apparel and accessories primarily in the southeastern United States.

Snowflake

Fundamentals

Flawless balance sheet, good value and pays a dividend.


Similar Companies

Share Price & News

How has Cato's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

2.2%

CATO

3.7%

US Specialty Retail

1.0%

US Market


1 Year Return

-9.9%

CATO

2.7%

US Specialty Retail

6.7%

US Market

Return vs Industry: CATO underperformed the US Specialty Retail industry which returned 2.7% over the past year.

Return vs Market: CATO underperformed the US Market which returned 6.7% over the past year.


Share holder returns

CATOIndustryMarket
7 Day2.2%3.7%1.0%
30 Day1.6%0.04%-1.8%
90 Day22.5%0.7%-1.8%
1 Year-1.4%-9.9%4.4%2.7%9.1%6.7%
3 Year-25.8%-41.4%40.0%32.8%46.1%36.6%
5 Year-32.1%-49.7%59.2%45.2%66.9%48.6%

Price Volatility Vs. Market

How volatile is Cato's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Cato undervalued based on future cash flows and its price relative to the stock market?

4%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Undervalued: CATO ($17.51) is trading below our estimate of fair value ($18.24)

Significantly Undervalued: CATO is trading below fair value, but not by a significant amount.


Price Based on Earnings

PE vs Industry: CATO is good value based on its PE Ratio (12.8x) compared to the Specialty Retail industry average (15.3x).

PE vs Market: CATO is good value based on its PE Ratio (12.8x) compared to the US market (17.5x).


Price Based on Expected Growth

Low PEG Ratio: Insufficient data to calculate CATO's PEG Ratio to determine if it is good value.


Price Based on Value of Assets

PB vs Industry: CATO is good value based on its PB Ratio (1.2x) compared to the US Specialty Retail industry average (1.3x).


Next Steps

Future Growth

How is Cato expected to perform in the next 1 to 3 years based on estimates from 0 analysts?

9.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Earnings vs Savings Rate: CATO's forecast earnings growth (9% per year) is above the savings rate (2.7%).

Earnings vs Market: CATO's earnings (9% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: CATO's earnings are forecast to grow, but not significantly.

Revenue vs Market: Insufficient data to determine if CATO's revenue is forecast to grow faster than the US market.

High Growth Revenue: Insufficient data to determine if CATO's revenue is forecast to grow faster than 20% per year.


Earnings per Share Growth Estimates


Future Return on Equity

High Future ROE: Insufficient data to determine if CATO's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Cato performed over the past 5 years?

-25.8%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: CATO's earnings have declined by -25.8% per year over the past 5 years.

Accelerating Growth: CATO's earnings growth over the past year (97.2%) exceeds its 5-year average (-25.8% per year).

Earnings vs Industry: CATO earnings growth over the past year (97.2%) exceeded the Specialty Retail industry 8.3%.


Return on Equity

High ROE: CATO's Return on Equity (10.1%) is considered low.


Return on Assets

ROA vs Industry: CATO's Return on Assets is below or equal to the Specialty Retail industry average last year.


Return on Capital Employed

ROCE Improving: CATO's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Cato's financial position?


Financial Position Analysis

Short Term Liabilities: CATO's short term assets ($369.3M) exceeds its short term liabilities ($179.6M)

Long Term Liabilities: CATO's short term assets (369.3M) exceeds its long term liabilities (143.1M)


Debt to Equity History and Analysis

Debt Level: CATO is debt free.

Reducing Debt: CATO has not had any debt for past 5 years.

Debt Coverage: CATO has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: CATO has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: CATO has a high level of physical assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if CATO's debt is covered by short term assets.


Next Steps

Dividend

What is Cato's current dividend yield, its reliability and sustainability?

7.54%

Current Dividend Yield


Dividend Yield vs Market

company7.5%marketbottom25%1.5%markettop25%3.8%industryaverage3.5%forecastin3Yearsn/a

Current dividend yield vs market & industry


Dividend Yield and Payments Analysis

Notable Dividend: CATO's dividend (7.54%) is higher than the bottom 25% of dividend payers in the US market (1.46%).

High Dividend: CATO's dividend (7.54%) is in the top 25% of dividend payers in the US market (3.77%)

Stable Dividend: CATO's dividends per share have been stable in the past 10 years.

Growing Dividend: CATO's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (96.7%), CATO's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Cato's salary, the management and board of directors tenure and is there insider trading?

11.1yrs

Average management tenure


CEO

John Derham Cato (69yo)

20.4yrs

Tenure

US$4,283,283

Compensation

Mr. John P. Derham Cato has been the Chairman of The Cato Corporation since January 2004 and also has been its President and Chief Executive Officer since June 1997 and May 1999 respectively. From May 1999 ...


CEO Compensation Analysis

Compensation vs. Market: John's total compensation ($USD4.28M) is above average for companies of similar size in the US market ($USD1.85M).

Compensation vs Earnings: John's compensation has increased by more than 20% in the past year.


Management Age and Tenure

11.1yrs

Average Tenure

59.5yo

Average Age

Experienced Management: CATO's management team is seasoned and experienced (11.1 years average tenure).


Board Age and Tenure

10.4yrs

Average Tenure

62.5yo

Average Age

Experienced Board: CATO's board of directors are seasoned and experienced ( 10.4 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$92805 Jan 19
Daniel Stowe
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares64.38
Max PriceUS$14.41

Ownership Breakdown


Management Team

  • John Derham Cato (69yo)

    Chairman

    • Tenure: 20.4yrs
    • Compensation: US$4.28m
  • Tim Greer (56yo)

    Executive VP & Director of Stores

    • Tenure: 15.7yrs
    • Compensation: US$924.05k
  • Shawn Smith

    Secretary

    • Tenure: 0yrs
  • Jeff Shock

    Senior VP & Controller

    • Tenure: 10.8yrs
  • John Howe (56yo)

    Executive VP & CFO

    • Tenure: 11.1yrs
    • Compensation: US$1.13m
  • Christin Reische

    Assistant Secretary

    • Tenure: 0yrs
  • Woody Cozart

    Senior Vice President of GMM - Fashion Division

    • Tenure: 0yrs
  • Stephen Headley

    Senior Vice President of Sourcing & MDSE Support

    • Tenure: 0yrs
  • Gordon Smith (63yo)

    Executive VP and Chief Real Estate & Store Development Officer

    • Tenure: 8.3yrs
    • Compensation: US$841.53k

Board Members

  • John Derham Cato (69yo)

    Chairman

    • Tenure: 20.4yrs
    • Compensation: US$4.28m
  • Pamela S. Davies (62yo)

    Independent Director

    • Tenure: 1.5yrs
    • Compensation: US$138.28k
  • Bailey Patrick (57yo)

    Independent Director

    • Tenure: 10.4yrs
    • Compensation: US$152.78k
  • Bryan Kennedy (61yo)

    Lead Independent Director

    • Tenure: 0yrs
    • Compensation: US$165.76k
  • Daniel Stowe (63yo)

    Independent Director

    • Tenure: 14.7yrs
    • Compensation: US$154.95k
  • Tom Henson (64yo)

    Independent Director

    • Tenure: 8.4yrs
    • Compensation: US$140.35k
  • Thomas Meckley (74yo)

    Independent Director

    • Tenure: 10.4yrs
    • Compensation: US$167.28k
  • Theresa Drew (62yo)

    Independent Director

    • Tenure: 0.4yrs

Company Information

The Cato Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The Cato Corporation
  • Ticker: CATO
  • Exchange: NYSE
  • Founded: 1946
  • Industry: Apparel Retail
  • Sector: Retail
  • Market Cap: US$416.716m
  • Shares outstanding: 23.80m
  • Website: https://www.catofashions.com

Number of Employees


Location

  • The Cato Corporation
  • 8100 Denmark Road
  • Charlotte
  • North Carolina
  • 28273
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CATONYSE (New York Stock Exchange)YesClass A Common StockUSUSDApr 1987
CO2ADB (Deutsche Boerse AG)YesClass A Common StockDEEURApr 1987

Biography

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, Reta ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/14 01:06
End of Day Share Price2019/10/11 00:00
Earnings2019/08/03
Annual Earnings2019/02/02


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.

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