The Cato (CATO) AI Stock Analysis

• Market Cap: $76.14M
• Dividend Yield: 4.4%
• Average Volume (3M): 63.67K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.49
• Revenue Growth: -4.13%
• EPS Growth: -18.26%
• Country: US
• Employees: 7,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 0.35
• Shares Outstanding: 17,962,675
• 10 Day Avg. Volume: 96,301
• 30 Day Avg. Volume: 63,672
• PEG Ratio: 0.21
• Price to Book (P/B): 0.40
• Price to Sales (P/S): 0.10
• P/FCF Ratio: -2.33
• Enterprise Value/Market Cap: 1.17
• Enterprise Value/Revenue: 0.14
• Enterprise Value/Gross Profit: 0.42
• Enterprise Value/Ebitda: -8.08
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 47 Neutral
• Price Target: $4.00 ▼(-1.96% Downside)

The overall stock score is primarily impacted by significant financial challenges, including negative profitability and cash flow issues. Technical analysis provides mixed signals, with some long-term support but weak short-term momentum. The negative P/E ratio highlights valuation concerns, despite a reasonable dividend yield.

The Cato Business Overview & Revenue Model

Company Description

The Cato (CATO) is a prominent retail and e-commerce company specializing in women's fashion and accessories. Founded in the United States, The Cato operates primarily in the apparel sector, offering a wide range of products including clothing, footwear, and jewelry. The company caters to a diverse demographic, focusing on providing stylish and affordable fashion options for its customers. With both physical stores and an online presence, The Cato aims to enhance the shopping experience by delivering high-quality products at competitive prices.

How the Company Makes Money

The Cato generates revenue primarily through the sale of women's apparel and accessories in its retail stores and online. The company's revenue model is driven by direct sales to consumers, where a significant portion of its income comes from in-store transactions complemented by e-commerce sales. Key revenue streams include product sales, seasonal promotions, and clearance events that help move inventory. Additionally, The Cato may engage in strategic partnerships with vendors and suppliers to enhance product offerings and leverage exclusive collections, further contributing to its earnings. The company's ability to adapt to fashion trends and consumer preferences also plays a critical role in maintaining its revenue growth.

The Cato Financial Statement Overview

Summary

Cato's financial performance is challenged by negative net income, declining EBIT and EBITDA margins, and negative operating and free cash flows. The balance sheet shows moderate leverage but negative return on equity, indicating profitability issues.

Income Statement

The Cato's income statement shows a challenging financial position with negative net income and declining EBIT and EBITDA margins in the TTM period. Although there is a slight revenue growth of 1.23% in the TTM, the company struggles with profitability, as evidenced by negative net profit margins. The gross profit margin remains relatively stable, but the overall trajectory indicates financial strain.

Balance Sheet

The balance sheet reflects moderate financial leverage with a debt-to-equity ratio of 0.75 in the TTM, which is manageable but indicates some reliance on debt. The return on equity is negative, highlighting profitability challenges. The equity ratio suggests a reasonable proportion of assets financed by equity, but the declining equity base is a concern.

Cash Flow

The cash flow statement reveals negative operating and free cash flows in the TTM, with a significant decline in free cash flow growth. The operating cash flow to net income ratio is negative, indicating cash flow issues. The free cash flow to net income ratio is positive, suggesting some ability to cover net losses, but overall cash flow management remains a concern.

Breakdown	TTM	Dec 2024	Dec 2024	Dec 2023	Dec 2023	Dec 2022
Income Statement
Total Revenue	650.83M	649.81M	649.81M	708.06M	708.06M	759.26M
Gross Profit	212.71M	213.37M	213.37M	243.74M	243.74M	249.60M
EBITDA	-11.01M	-6.24M	-6.24M	-3.90M	-3.90M	12.94M
Net Income	-18.98M	-18.06M	-18.06M	-23.94M	-23.94M	29.00K
Balance Sheet
Total Assets	436.89M	452.36M	452.36M	486.82M	486.82M	553.14M
Cash, Cash Equivalents and Short-Term Investments	93.45M	77.70M	77.70M	102.95M	102.95M	128.66M
Total Debt	129.90M	145.90M	145.90M	153.12M	153.12M	174.77M
Total Liabilities	264.70M	290.06M	290.06M	294.50M	294.50M	326.55M
Stockholders Equity	172.18M	162.30M	162.30M	192.32M	192.32M	226.59M
Cash Flow
Free Cash Flow	-18.38M	-27.62M	-27.62M	-12.05M	-12.05M	-6.06M
Operating Cash Flow	-12.94M	-19.75M	-19.75M	477.00K	477.00K	13.37M
Investing Cash Flow	21.41M	28.96M	28.96M	19.78M	19.78M	16.02M
Financing Cash Flow	-5.89M	-14.05M	-14.05M	-16.13M	-16.13M	-29.28M

The Cato Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 4.08
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CATO, the sentiment is Neutral. The current price of 4.08 is below the 20-day moving average (MA) of 4.08, below the 50-day MA of 4.25, and above the 200-day MA of 3.27, indicating a neutral trend. The MACD of -0.09 indicates Positive momentum. The RSI at 43.24 is Neutral, neither overbought nor oversold. The STOCH value of 27.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CATO.

The Cato Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
DXLG	51 Neutral	$49.51M	―	-3.58%	―	-9.85%	-137.20%
CATO	47 Neutral	$76.14M	―	-10.73%	4.40%	-4.13%	-18.26%
DLTH	47 Neutral	$99.07M	-1.88	-24.97%	―	-6.13%	-215.18%
LVLU	47 Neutral	$12.37M	-0.25	-187.85%	―	-10.68%	-74.47%
TLYS	41 Neutral	$45.41M	―	-43.51%	―	-11.10%	-10.31%
RENT	41 Neutral	$27.30M	―	―	―	0.20%	18.30%