The Cato Corporation operates as a specialty retailer of fashion apparel and accessories in the Southeastern United States. The company was founded in 1946 and is based in Charlotte, North Carolina.
CATO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Cato Corp. To summarize, we found that Cato Corp ranked in the 55th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 27% on a DCF basis. The most interesting components of our discounted cash flow analysis for Cato Corp ended up being:
The company's compound free cash flow growth rate over the past 5.58 years comes in at -0.07%; that's greater than only 19.8% of US stocks we're applying DCF forecasting to.
Cato Corp's weighted average cost of capital (WACC) is 7%; for context, that number is higher than merely 23.49% of tickers in our DCF set.
The company's cost of debt, derived from its interest coverage, tax rate, and market capitalization, is greater than only 0% of stocks in its sector (Consumer Cyclical).
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
AN, LEVI, CLUB, MYE, and SIX can be thought of as valuation peers to CATO, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
The Cato Corporation (NYSE: CATO) today reported net loss of $28.4 million or ($1.19) per diluted share for the first quarter ended May 2, 2020, compared to net income of $21.3 million or $.87 per diluted share for the first quarter ended May 4, 2019. Sales for the first quarter were $98.8 million, or a decrease of 57% from sales of $228.1 million for the first quarter ended May 4, 2019. The Company's same-store sales for the quarter decreased 56% to last year.
The Cato Corporation (NYSE: CATO) today announced it reopened a majority of its stores, consistent with local health and safety guidelines and regulations. Company management will assess the guidance and local government mandates on a location by location basis as it executes its plan to reopen stores.
The Cato Corporation (NYSE: CATO) today announced it will extend the closure of all brick and mortar stores, until further notice. Company management will continue to assess the situation, market by market as additional guidance is issued from U.S. and local governments, as well as the Centers for Disease Control, as it develops its plan to reopen stores at a future date.
The Cato Corporation (NYSE: CATO) today reported earnings for the fourth quarter and year ended February 1, 2020. For the fourth quarter, the Company reported a net loss of $3.2 million, or a loss of $0.13 per diluted share, compared to a net loss of $3.2 million or a loss of $0.13 per diluted share for the prior fourth quarter ended February 2, 2019. Full-year fiscal 2019 net income was $35.9 million or $1.46 per diluted share compared to $30.5 million or $1.23 per diluted share for 2018. For the year, net income increased 18% and earnings per diluted share increased 19% from the prior year.