Head to Head Review: Carter’s (CRI) and Michael Kors Holdings Limited (KORS)

Carter’s (NYSE: CRI) and Michael Kors Holdings Limited (NYSE:KORS) are both mid-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Earnings and Valuation

This table compares Carter’s and Michael Kors Holdings Limited’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Carter’s $3.26 billion 1.36 $494.84 million $5.09 18.24
Michael Kors Holdings Limited $4.46 billion 1.62 $1.07 billion $3.22 14.84

Michael Kors Holdings Limited has higher revenue and earnings than Carter’s. Michael Kors Holdings Limited is trading at a lower price-to-earnings ratio than Carter’s, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Carter’s has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, Michael Kors Holdings Limited has a beta of 0.03, indicating that its share price is 97% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Carter’s and Michael Kors Holdings Limited, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carter’s 0 3 9 0 2.75
Michael Kors Holdings Limited 3 18 6 0 2.11

Carter’s currently has a consensus price target of $103.10, indicating a potential upside of 11.03%. Michael Kors Holdings Limited has a consensus price target of $44.92, indicating a potential downside of 5.97%. Given Carter’s’ stronger consensus rating and higher possible upside, equities analysts plainly believe Carter’s is more favorable than Michael Kors Holdings Limited.

Profitability

This table compares Carter’s and Michael Kors Holdings Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carter’s 7.74% 33.18% 13.13%
Michael Kors Holdings Limited 11.91% 40.26% 26.12%

Institutional and Insider Ownership

97.1% of Carter’s shares are owned by institutional investors. Comparatively, 83.4% of Michael Kors Holdings Limited shares are owned by institutional investors. 3.1% of Carter’s shares are owned by insiders. Comparatively, 6.0% of Michael Kors Holdings Limited shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Carter’s pays an annual dividend of $1.48 per share and has a dividend yield of 1.6%. Michael Kors Holdings Limited does not pay a dividend. Carter’s pays out 29.1% of its earnings in the form of a dividend. Carter’s has increased its dividend for 3 consecutive years.

Summary

Carter’s beats Michael Kors Holdings Limited on 9 of the 17 factors compared between the two stocks.

About Carter’s

Carter’s, Inc. (Carter’s) is a marketer of apparel for babies and young children in the United States and Canada. The Company owns two brand names in the children’s apparel industry, Carter’s and OshKosh B’gosh (OshKosh). The Company operates through five segments: Carter’s Retail, Carter’s Wholesale, OshKosh Retail, OshKosh Wholesale and International. Its International segment includes company-operated retail stores and online Websites, wholesale operations, and royalty income from its international licensees. It markets products for consumers, and offer various product categories, including baby, sleepwear, play clothes, and related accessories. Its multi-channel international business model – retail stores, online and wholesale – enables it to reach a range of consumers around the world. As of December 31, 2016, its channels included approximately 18,000 wholesale locations, 792 stores in the United States, 164 stores in Canada, and its Canadian and the United States Websites.

About Michael Kors Holdings Limited

Michael Kors Holdings Limited is a designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks MICHAEL KORS, MICHAEL MICHAEL KORS, and various other related trademarks and logos. The Company operates through three segments: retail, wholesale and licensing. The Retail operations consist of collection stores and lifestyle stores, including concessions and outlet stores, located primarily in the Americas (the United States, Canada and Latin America), Europe and Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the Americas, Europe and Asia. The Company licenses its trademarks on products, such as fragrances, beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties, as well as through geographic licenses.

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