Financial Contrast: Fossil Group (NASDAQ:FOSL) and Citi Trends (NASDAQ:CTRN)

Citi Trends (NASDAQ:CTRN) and Fossil Group (NASDAQ:FOSL) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Earnings and Valuation

This table compares Citi Trends and Fossil Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Citi Trends	$753.08 million	0.45	-$43.17 million	($2.00)	-20.37
Fossil Group	$1.15 billion	0.19	-$102.67 million	($1.27)	-3.06

Citi Trends has higher earnings, but lower revenue than Fossil Group. Citi Trends is trading at a lower price-to-earnings ratio than Fossil Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

61.1% of Fossil Group shares are owned by institutional investors. 3.8% of Citi Trends shares are owned by insiders. Comparatively, 2.9% of Fossil Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Citi Trends has a beta of 2.16, suggesting that its stock price is 116% more volatile than the S&P 500. Comparatively, Fossil Group has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500.

Profitability

This table compares Citi Trends and Fossil Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Citi Trends	-2.05%	-22.84%	-5.55%
Fossil Group	-6.32%	-18.08%	-3.11%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Citi Trends and Fossil Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Citi Trends	1	0	2	0	2.33
Fossil Group	1	0	1	0	2.00

Citi Trends presently has a consensus price target of $39.50, indicating a potential downside of 3.04%. Fossil Group has a consensus price target of $5.00, indicating a potential upside of 28.87%. Given Fossil Group’s higher probable upside, analysts clearly believe Fossil Group is more favorable than Citi Trends.

About Citi Trends

Citi Trends, Inc. operates as a value retailer of fashion apparel, accessories, and home goods. The company offers apparel, such as fashion sportswear and footwear for men and ladies, as well as apparel for kids, including newborns, infants, toddlers, boys, and girls; sleepwear, lingerie, and scrubs for ladies; and kids uniforms and accessories. It also provides accessories and beauty products that include handbags, luggage, hats, belts, sunglasses, jewelry, and watches, as well as offers outerwear for men and women. In addition, the company offers home and lifestyle products comprising home products for the bedroom, bathroom, kitchen, and decorative accessories; and food, tech, team sports, health and products, as well as seasonal items, books, and toys. Citi Trends, Inc. provides its products primarily to African American and multicultural families in the United States. The company was formerly known as Allied Fashion, Inc. and changed its name to Citi Trends, Inc. in 2001. Citi Trends, Inc. was founded in 1946 and is headquartered in Savannah, Georgia.

About Fossil Group

Fossil Group, Inc., together with its subsidiaries, designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. The company’s products include traditional watches, smartwatches, jewelry, handbags, small leather goods, belts, and sunglasses. It also manufactures and distributes private label brands, as well as branded products purchased for resell in other branded retail stores. The company offers its products under its proprietary brands, such as FOSSIL, SKAGEN, MICHELE, RELIC, and ZODIAC; and under the licensed brands, including ARMANI EXCHANGE, DIESEL, DKNY, EMPORIO ARMANI, KATE SPADE NEW YORK, MICHAEL KORS, TORY BURCH, and Skechers. The company sells its products through company-owned retail and outlet stores, department and specialty retail stores, mass market stores, e-commerce sites, licensed and franchised FOSSIL retail stores, and retail concessions, as well as sells its products on airlines. The company was formerly known as Fossil, Inc. and changed its name to Fossil Group, Inc. in May 2013. Fossil Group, Inc. was founded in 1984 and is headquartered in Richardson, Texas.