Carter’s (CRI) and Francesca’s Holdings Corporation (FRAN) Head-To-Head Analysis

Carter’s (NYSE: CRI) and Francesca’s Holdings Corporation (NASDAQ:FRAN) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Earnings & Valuation

This table compares Carter’s and Francesca’s Holdings Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Carter’s $3.26 billion 1.39 $494.84 million $5.09 18.56
Francesca’s Holdings Corporation $493.21 million 0.52 $78.79 million $0.97 7.23

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

Institutional & Insider Ownership

97.1% of Carter’s shares are held by institutional investors. 3.1% of Carter’s shares are held by company insiders. Comparatively, 1.2% of Francesca’s Holdings Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for Carter’s and Francesca’s Holdings Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carter’s 0 4 9 0 2.69
Francesca’s Holdings Corporation 0 6 2 0 2.25

Carter’s currently has a consensus target price of $102.18, suggesting a potential upside of 8.14%. Francesca’s Holdings Corporation has a consensus target price of $13.86, suggesting a potential upside of 97.68%. Given Francesca’s Holdings Corporation’s higher possible upside, analysts plainly believe Francesca’s Holdings Corporation is more favorable than Carter’s.

Dividends

Carter’s pays an annual dividend of $1.48 per share and has a dividend yield of 1.6%. Francesca’s Holdings Corporation 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.

Risk & Volatility

Carter’s has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500. Comparatively, Francesca’s Holdings Corporation has a beta of 0.18, indicating that its stock price is 82% less volatile than the S&P 500.

Profitability

This table compares Carter’s and Francesca’s Holdings Corporation’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%
Francesca’s Holdings Corporation 7.28% 31.88% 18.83%

Summary

Carter’s beats Francesca’s Holdings Corporation on 14 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 Francesca’s Holdings Corporation

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

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