Analyzing Stein Mart (OTCMKTS:SMRTQ) and GAP (NYSE:GAP)

Stein Mart (OTCMKTS:SMRTQ) and GAP (NYSE:GAP) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and target prices for Stein Mart and GAP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stein Mart	0	0	0	0	0.00
GAP	1	5	5	0	2.36

GAP has a consensus price target of $28.30, suggesting a potential upside of 16.85%. Given GAP’s stronger consensus rating and higher possible upside, analysts clearly believe GAP is more favorable than Stein Mart.

Earnings and Valuation

This table compares Stein Mart and GAP”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stein Mart	N/A	N/A	N/A	N/A	N/A
GAP	$14.89 billion	0.61	$502.00 million	$2.16	11.21

GAP has higher revenue and earnings than Stein Mart.

Profitability

This table compares Stein Mart and GAP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stein Mart	N/A	N/A	N/A
GAP	5.40%	29.03%	7.26%

Insider and Institutional Ownership

58.8% of GAP shares are owned by institutional investors. 39.4% of Stein Mart shares are owned by company insiders. Comparatively, 31.0% of GAP shares are owned 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.

Summary

GAP beats Stein Mart on 8 of the 9 factors compared between the two stocks.

About Stein Mart

Stein Mart, Inc., a specialty omnichannel off-price retailer, offers designer and name-brand fashion apparels, home décor merchandise, accessories, and shoes at everyday discount prices in the United States. The company's stores also provides endless aisle, a mobile technology to locate products; a SMart Rewards loyalty program; co-branded and private label credit card programs; and electronic gift cards. As of June 3, 2020, it operated 281 stores in 30 states. The company also sells its products through an online retail selling site. Stein Mart, Inc. was founded in 1908 and is headquartered in Jacksonville, Florida. On August 12, 2020, Stein Mart, Inc., along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Florida.

About GAP

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.