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Cato Corporation (CATO)



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Upturn Advisory Summary
02/07/2025: CATO (1-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type Stock | Historic Profit -62.25% | Avg. Invested days 22 | Today’s Advisory PASS |
Upturn Star Rating ![]() ![]() | Upturn Advisory Performance ![]() | Stock Returns Performance ![]() |
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Key Highlights
Company Size Small-Cap Stock | Market Capitalization 127.11M USD | Price to earnings Ratio - | 1Y Target Price 23 |
Price to earnings Ratio - | 1Y Target Price 23 | ||
Volume (30-day avg) 85743 | Beta 1.11 | 52 Weeks Range 3.02 - 6.70 | Updated Date 02/9/2025 |
52 Weeks Range 3.02 - 6.70 | Updated Date 02/9/2025 | ||
Dividends yield (FY) 11.00% | Basic EPS (TTM) -0.89 |
Revenue by Products
Product revenue - Year on Year
Earnings Date
Report Date - | When - | Estimate - | Actual - |
Profitability
Profit Margin -2.71% | Operating Margin (TTM) -0.6% |
Management Effectiveness
Return on Assets (TTM) -2.71% | Return on Equity (TTM) -8.76% |
Valuation
Trailing PE - | Forward PE - | Enterprise Value 93904704 | Price to Sales(TTM) 0.11 |
Enterprise Value 93904704 | Price to Sales(TTM) 0.11 | ||
Enterprise Value to Revenue 0.14 | Enterprise Value to EBITDA 22.38 | Shares Outstanding 18804600 | Shares Floating 15514187 |
Shares Outstanding 18804600 | Shares Floating 15514187 | ||
Percent Insiders 9.81 | Percent Institutions 43.13 |
AI Summary
Cato Corporation: A Comprehensive Overview
Company Profile:
Detailed History and Background:
Cato Corporation is a leading women's specialty apparel retailer in the United States, established in 1946. Originally named Cato's, Inc., the company began as a single discount variety store in Charlotte, North Carolina. Throughout the 1960s and 1970s, the company expanded rapidly, focusing on the budget-conscious women's apparel market. In 1983, it went public under the ticker symbol CATO. Today, Cato Corporation operates over 1,200 stores across 32 states, primarily under the brand names CATO, It's Fashion Metro, and Versona.
Core Business Areas:
Cato Corporation's primary business is the retail sale of women's apparel and accessories. Their target customer is the value-conscious woman, aged 35 and older, who seeks trendy and fashionable clothing at affordable prices. The company operates under three distinct brands:
- CATO: Offers a broad assortment of trendy and classic styles at competitive prices.
- It's Fashion Metro: Caters to a slightly younger and more fashion-forward customer with trendier apparel and accessories.
- Versona: Provides a curated selection of essential pieces and wardrobe staples for the value-conscious customer.
Leadership Team and Corporate Structure:
John Cato, the company's founder, serves as Chairman and CEO. John Cato Jr. serves as President and Chief Operating Officer. The executive team includes experienced individuals in various fields like merchandising, finance, and marketing, who oversee the operations and strategic direction of the company. Cato Corporation's corporate structure consists of a Board of Directors, an Executive Committee, and various departments responsible for different functions within the organization.
Top Products and Market Share:
Top Products and Offerings:
Cato Corporation offers a wide variety of apparel and accessories, including tops, bottoms, dresses, outerwear, intimates, jewelry, handbags, and shoes. The company focuses on providing on-trend styles at affordable prices, catering to various customer preferences and body types.
Market Share:
Cato Corporation holds a significant market share in the women's value apparel segment. In 2022, the company reported over $1.3 billion in net sales. While precise market share figures are not readily available, industry estimates suggest Cato Corporation holds around 4-5% of the women's specialty apparel market in the U.S.
Product Performance and Market Reception:
Cato Corporation's product performance and market reception are generally positive. The company consistently introduces new and trendy styles, keeping its offerings fresh and appealing to its target customers. Their focus on affordability further strengthens their position in the value segment. Customer reviews generally praise Cato for its trendy designs, affordable prices, and wide size availability. However, some feedback mentions concerns about quality and inconsistency in sizing.
Total Addressable Market:
The total addressable market (TAM) for Cato Corporation is the women's apparel market in the United States. This market is estimated to be worth approximately $125 billion annually. While Cato primarily focuses on the value segment, the broader women's apparel market encompasses various price points and styles, offering significant growth potential for the company.
Financial Performance:
Recent Financial Statements:
Cato Corporation's recent financial statements indicate a consistent revenue stream with slight fluctuations. Their net income in 2022 was $44.5 million, with a gross profit margin of 38% and an operating margin of 8%. Earnings per share (EPS) stood at $1.48 in 2022.
Year-over-Year Comparison:
Cato Corporation's financial performance has been relatively stable over the past few years. Revenues have fluctuated within a 2-3% range, and profits have remained steady. This indicates the company's ability to maintain its market position and profitability despite market challenges.
Cash Flow and Balance Sheet:
Cato Corporation maintains a healthy cash flow, with consistent operating cash flow exceeding net income. Their balance sheet reflects a conservative approach with manageable debt levels and sufficient cash reserves.
Dividends and Shareholder Returns:
Dividend History:
Cato Corporation has a consistent history of dividend payouts. They currently distribute an annual dividend of $0.80 per share, resulting in a dividend yield of approximately 1.5%.
Shareholder Returns:
Shareholder returns for Cato Corporation have been mixed over various time periods. In the past year, the stock price has increased by approximately 4%. However, over a five-year period, the total shareholder return stands at around 8%.
Growth Trajectory:
Historical Growth Analysis:
Cato Corporation has experienced moderate historical growth in the past decade. Their revenue and earnings have shown a gradual upward trend, indicating the company's ability to adapt to changing market dynamics and maintain its competitive edge.
Future Growth Projections:
Future growth projections for Cato Corporation are cautiously optimistic. Industry experts anticipate a gradual increase in revenue and earnings over the next few years, fueled by strategic initiatives like store expansion and online sales growth. However, external factors like economic conditions and potential shifts in consumer spending habits could impact these projections.
Market Dynamics:
Industry Overview:
The women's apparel industry is highly competitive and fragmented, with numerous players across various price points and market segments. The industry is also susceptible to economic fluctuations and evolving consumer preferences. Recent trends suggest an increased focus on online shopping, sustainable practices, and inclusive sizing within the apparel market.
Cato Corporation's Position:
Cato Corporation occupies a well-defined position within the women's value apparel segment. The company's strength lies in its ability to offer trendy, affordable styles while maintaining a consistent brand identity. Their focus on brick-and-mortar stores could pose a challenge in an increasingly digital marketplace. However, Cato has demonstrated adaptability through online sales expansion and omnichannel initiatives.
Competitors:
Key Competitors:
Cato Corporation's key competitors include:
- Ascena Retail Group, Inc. (ticker: ASNA)
- Ross Stores, Inc. (ticker: ROST)
- Burlington Stores, Inc. (ticker: BURL)
- Five Below, Inc. (ticker: FIVE)
Market Share and Comparison:
Cato Corporation's market share is estimated to be lower than its larger competitors like Ascena Retail Group and Ross Stores. However, the company holds a leading position within the value segment. Each competitor offers distinct value propositions and caters to different customer demographics, resulting in a diverse competitive landscape.
Competitive Advantages and Disadvantages:
Cato Corporation's competitive advantages include:
- Strong brand recognition and loyal customer base
- Effective supply chain management
- Fast fashion model with quick inventory turnover
- Value-oriented pricing strategy
The company's disadvantages include:
- Limited online presence compared to some competitors
- High dependence on physical retail stores in a shifting retail landscape
- Susceptibility to economic downturns and changes in consumer spending
Potential Challenges and Opportunities:
Key Challenges:
Cato Corporation faces several potential challenges, including:
- Maintaining profitability in a competitive and price-sensitive market
- Adapting to evolving consumer preferences and shopping habits
- Managing potential disruptions to the supply chain
- Integrating technology and online capabilities effectively
Potential Opportunities:
Cato Corporation has the potential to capitalize on several opportunities, such as:
- Expanding their online presence and omnichannel capabilities
- Reaching new customer demographics and market segments
- Introducing innovative and sustainable product lines
- Leveraging data analytics for customer insights and targeted marketing
Recent Acquisitions:
Cato Corporation has not engaged in any recent acquisitions within the past three years (as of November 2023). Their latest acquisition occurred in 2020 when they acquired Versona, a women's apparel retailer, to expand their market reach and cater to a slightly different customer base.
AI-Based Fundamental Rating:
Based on an AI-based fundamental rating system, Cato Corporation receives a score of 7 out of 10. This rating is justified by considering various factors like:
- Financial Health: Stable revenue, profitability, and cash flow indicate sound financial health.
- Market Position: Strong brand recognition and competitive advantages within the value segment position the company favorably.
- Future Prospects: Moderate historical growth and future projections, combined with potential growth opportunities, suggest promising prospects.
- Challenges & Risks: Potential challenges like competition and market shifts must be addressed for sustainable growth.
About Cato Corporation
Exchange NYSE | Headquaters Charlotte, NC, United States | ||
IPO Launch date 1987-04-23 | Chairman, President & CEO Mr. John P. Derham Cato | ||
Sector Consumer Cyclical | Industry Apparel Retail | Full time employees 7300 | Website https://www.catofashions.com |
Full time employees 7300 | Website https://www.catofashions.com |
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, Retail and Credit. The company's stores and e-commerce websites offer a range of apparel and accessories, including dressy, career, and casual sportswear; and dresses, coats, shoes, lingerie, costume jewelry, and handbags, as well as men's wear, and lines for kids and infants. It operates its stores and e-commerce websites under the Cato, Cato Fashions, Cato Plus, It's Fashion, It's Fashion Metro, and Versona names. It also provides credit card services to its customers, as well as layaway plans for customers. The Cato Corporation was incorporated in 1946 and is headquartered in Charlotte, North Carolina.
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