Sears Hometown and Outlet Stores (SHOS) and Dillard’s (DDS) Financial Review

Sears Hometown and Outlet Stores (NASDAQ:SHOS) and Dillard’s (NYSE:DDS) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Dividends

Dillard’s pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Sears Hometown and Outlet Stores does not pay a dividend. Dillard’s pays out 8.3% of its earnings in the form of a dividend. Dillard’s has raised its dividend for 4 consecutive years.

Profitability

This table compares Sears Hometown and Outlet Stores and Dillard’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sears Hometown and Outlet Stores -3.94% -35.77% -15.25%
Dillard’s 3.70% 9.88% 4.40%

Risk & Volatility

Sears Hometown and Outlet Stores has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, Dillard’s has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Insider & Institutional Ownership

45.2% of Sears Hometown and Outlet Stores shares are owned by institutional investors. Comparatively, 87.0% of Dillard’s shares are owned by institutional investors. 0.6% of Sears Hometown and Outlet Stores shares are owned by insiders. Comparatively, 19.1% of Dillard’s shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Sears Hometown and Outlet Stores and Dillard’s’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sears Hometown and Outlet Stores $1.72 billion 0.03 -$95.05 million N/A N/A
Dillard’s $6.42 billion 0.30 $221.32 million $4.80 14.46

Dillard’s has higher revenue and earnings than Sears Hometown and Outlet Stores.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Sears Hometown and Outlet Stores and Dillard’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sears Hometown and Outlet Stores 0 0 0 0 N/A
Dillard’s 3 3 0 0 1.50

Dillard’s has a consensus target price of $60.83, suggesting a potential downside of 12.33%. Given Dillard’s’ higher probable upside, analysts clearly believe Dillard’s is more favorable than Sears Hometown and Outlet Stores.

Summary

Dillard’s beats Sears Hometown and Outlet Stores on 11 of the 13 factors compared between the two stocks.

Sears Hometown and Outlet Stores Company Profile

Sears Hometown and Outlet Stores, Inc. engages in the retail sale of home appliances, lawn and garden equipment, tools, and hardware in the United States. The company operates in two segments, Sears Hometown and Hardware, and Sears Outlet. The Sears Hometown and Hardware segment operates Sears Hometown Stores that offer products and services across a selection of merchandise categories, including home appliances, lawn and garden equipment, tools, sporting goods, and household goods; and Sears Hardware Stores, which provide products and services across a range of merchandise categories, such as home appliances, lawn and garden equipment, tools, other home improvement products, fasteners, electrical supplies, and plumbing supplies. It also operates Sears Home Appliance Showrooms that offer home appliances and related services in stores primarily located in strip malls and lifestyle centers of metropolitan areas. The Sears Outlet segment provides in-store and online access to purchase outlet-value products across an assortment of merchandise categories, including home appliances, mattresses, apparel, sporting goods, lawn and garden equipment, and tools, as well as other household goods, such as furniture. This segment also sells its products and services through searsoutlet.com. The company also offers various services, such as home delivery, installation, and extended service plans. As of August 4, 2018, the company, and its dealers and franchisees operated 783 stores in 49 states in the United States, as well as in Puerto Rico and Bermuda. Sears Hometown and Outlet Stores, Inc. is headquartered in Hoffman Estates, Illinois.

Dillard’s Company Profile

Dillard's, Inc. operates retail department stores primarily in the Southeastern, Southwestern, and Midwestern areas of the United States. The company's stores offer a selection of merchandise, including fashion apparel for women, men, and children; accessories; cosmetics; home furnishings; and other consumer goods. Its brand merchandise includes Antonio Melani, Gianni Bini, GB, Roundtree & Yorke, and Daniel Cremieux. The company also sells its merchandise online through its Website, dillards.com, which provides online gift registries and various other services. In addition, it operates a general contracting construction company that engages in constructing and remodeling stores. As of February 3, 2018, the company operated 292 Dillard's stores, including 24 clearance centers; and an Internet store. Dillard's, Inc. was founded in 1938 and is based in Little Rock, Arkansas.

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