Head to Head Survey: Cabela’s (CAB) & Michaels Companies (MIK)

Cabela’s (NYSE: CAB) and Michaels Companies (NASDAQ:MIK) are both mid-cap cyclical consumer goods & services companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitability.

Profitability

This table compares Cabela’s and Michaels Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cabela’s 3.18% 5.53% 1.32%
Michaels Companies 7.33% -22.16% 17.99%

Valuation & Earnings

This table compares Cabela’s and Michaels Companies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cabela’s N/A N/A N/A $1.93 31.87
Michaels Companies $5.20 billion 0.77 $378.15 million $1.96 11.22

Michaels Companies has higher revenue and earnings than Cabela’s. Michaels Companies is trading at a lower price-to-earnings ratio than Cabela’s, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

56.9% of Cabela’s shares are held by institutional investors. 21.0% of Cabela’s shares are held by company insiders. Comparatively, 1.3% of Michaels Companies shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Cabela’s has a beta of 0.14, meaning that its share price is 86% less volatile than the S&P 500. Comparatively, Michaels Companies has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Cabela’s and Michaels Companies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cabela’s 0 4 1 0 2.20
Michaels Companies 1 2 5 0 2.50

Cabela’s currently has a consensus target price of $61.50, indicating a potential upside of 0.00%. Michaels Companies has a consensus target price of $24.29, indicating a potential upside of 10.39%. Given Michaels Companies’ stronger consensus rating and higher possible upside, analysts clearly believe Michaels Companies is more favorable than Cabela’s.

Summary

Michaels Companies beats Cabela’s on 8 of the 11 factors compared between the two stocks.

Cabela’s Company Profile

Cabela’s Incorporated is an omni-channel retailer of hunting, fishing, camping, shooting sports and related outdoor merchandise. The Company offers its customers a selection of national and regional brand products, including its Cabela’s brand. The Company’s segments include Merchandising and Financial Services. The Merchandising segment sells products and services through the Company’s retail stores, its e-commerce Websites (Cabelas.com and Cabelas.ca), and its catalogs. The United States merchandising and Canada merchandising operating segments have been aggregated into its Merchandising segment. The Financial Services segment issues co-branded credit cards, which are available through all of its channels. The Company’s product assortment includes merchandise and equipment for hunting, fishing, marine use, camping, and recreational sport shooting, along with casual and outdoor apparel and footwear, optics, vehicle accessories, and gifts and home furnishings with an outdoor theme.

Michaels Companies Company Profile

The Michaels Companies, Inc. (Michaels) is an arts and crafts specialty retailer in North America. The Company’s segments include Michaels-U.S., Michaels-Canada, Aaron Brothers, Pat Catan’s and Darice. As of January 28, 2017, the Company operated 1,223 Michaels retail stores in 49 states and Canada, with approximately 18,000 average square feet of selling space per store. It operated 109 Aaron Brothers stores in nine states, with approximately 5,500 average square feet of selling space and 35 Pat Catan’s stores in five states, with approximately 32,000 average square feet of selling space, as of January 28, 2017. The Company also operates an international wholesale business under the Darice brand name. The Company’s stores purchase custom frames, framing supplies and mats from its framing operation and subsidiary, Artistree, Inc. (Artistree), which consists of a manufacturing facility and four regional processing centers.

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