Sequential Brands Group (SQBG) vs. Kate Spade & Co (KATE) Critical Survey

Sequential Brands Group (NASDAQ: SQBG) and Kate Spade & Co (NYSE:KATE) are both apparel & accessories retailers – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Valuation & Earnings

This table compares Sequential Brands Group and Kate Spade & Co’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sequential Brands Group $155.53 million 0.70 -$820,000.00 ($0.38) -4.53
Kate Spade & Co N/A N/A N/A $1.10 16.81

Kate Spade & Co has lower revenue, but higher earnings than Sequential Brands Group. Sequential Brands Group is trading at a lower price-to-earnings ratio than Kate Spade & Co, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

50.3% of Sequential Brands Group shares are owned by institutional investors. Comparatively, 97.9% of Kate Spade & Co shares are owned by institutional investors. 27.3% of Sequential Brands Group shares are owned by insiders. Comparatively, 0.8% of Kate Spade & Co shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sequential Brands Group and Kate Spade & Co, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sequential Brands Group 0 4 3 0 2.43
Kate Spade & Co 1 11 1 0 2.00

Sequential Brands Group presently has a consensus target price of $6.92, indicating a potential upside of 302.13%. Kate Spade & Co has a consensus target price of $20.25, indicating a potential upside of 9.52%. Given Sequential Brands Group’s stronger consensus rating and higher possible upside, analysts plainly believe Sequential Brands Group is more favorable than Kate Spade & Co.

Volatility & Risk

Sequential Brands Group has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500. Comparatively, Kate Spade & Co has a beta of 1.75, suggesting that its share price is 75% more volatile than the S&P 500.

Profitability

This table compares Sequential Brands Group and Kate Spade & Co’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sequential Brands Group -14.35% 2.26% 0.85%
Kate Spade & Co 0.44% 1.11% 0.43%

Summary

Sequential Brands Group beats Kate Spade & Co on 7 of the 12 factors compared between the two stocks.

Sequential Brands Group Company Profile

Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.

Kate Spade & Co Company Profile

Kate Spade & Company is engaged in the design and marketing of a range of accessories and apparel. It operates through three segments. The KATE SPADE North America segment consists of the Company’s kate spade new york and JACK SPADE brands in North America. The KATE SPADE International segment consists of the Company’s kate spade new york and JACK SPADE brands in international markets, which operates principally in Japan, Asia (excluding Japan), Europe and Latin America). The Adelington Design Group segment primarily consists of exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands. In addition, the Adelington Design Group segment serves J.C. Penney Corporation, Inc. (JCPenney) through exclusive supplier agreements for the LIZ CLAIBORNE and MONET jewelry lines. As of December 31, 2016, it operated 98 the United States Specialty Retail Stores; 35 Foreign Specialty Retail Stores; 65 the United States Outlet Stores; 17 Foreign Outlet Stores, and 54 Concessions.

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