Cato Earnings Preview

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After beating estimates last quarter by $0.02, Cato (NYS: CATO) has set the standard for itself. The company will unveil its latest earnings on Thursday. Cato operates women's fashion specialty stores in the Southeastern United States under two segments.

What analysts say:

  • Buy, sell, or hold?: Analysts are very bullish on this stock, unanimously backing it as a buy. Analysts like Cato better than competitor bebe stores overall. Six out of eight analysts rate bebe stores a buy compared to one of one for Cato.
  • Revenue forecasts:
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.20 per share. Estimates range from $0.18 to $0.21.

What our community says:
CAPS All-Stars are solidly behind the stock with 88.2% assigning it an outperform rating. The community at large backs the All-Stars with 83.3% awarding it a rating of outperform. Fools are bullish on Cato, though the message boards have been quiet lately with only 52 posts in the past 30 days. Cato has a bullish CAPS rating of four out of five stars that is about on par with the Fool community assessment.

Management:
Cato's profit has risen year over year by an average of 40% over the past five quarters. A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

38.0%

41.5%

34.0%

37.4%

Operating Margin

12.1%

17.5%

5.6%

5.0%

Net Margin

7.7%

11.3%

3.5%

3.4%

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Motley Fool newsletter services have recommended buying shares of Cato.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Earnings estimates provided by Zacks

At the time this article was published

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