Winning CATO Stock Forecast: Cato Fashions Continues Comeback in 2018

“We are starting to see more favorable sales trends as a result of adjustments to our merchandise strategy. We remain optimistic about our ability to build on this momentum going forward.”

John Cato, Chairman, President, and Chief Executive Officer

(Source: Wikimedia Commons)

On May 23, the I Know First algorithm gave the Cato Corporation (NYSE: CATO) a signal of 22.27 and predictability of .22 over a 14 day time horizon in the stocks under $20 forecast package. In accordance with the algorithm, over this time period from May 23 to June 6, the stock increased to $23.80 from a closing price of $17.46 on M ay 22, a gain of 36.33%.

Last year, Cato Fashions was one of the small specialty retailers struggling the most from the retail apocalypse. However, on May 24, CATO announced their earnings for Q1 2019 which were must better than expected and are beginning to show a promising future for the company. The company increased revenue to $23.4 million in Q1 2018 from $22.2 million in Q1 2017. This corresponded with EPS of $0.94 in comparison, an increase of 11%. Additionally, gross margin increased 1% to 39.7% thanks to lower buying and opportunity costs and higher merchandise margins. Sales decreased only 1% from last year to $236 million. However, for the 4 weeks ending on June 2, 2018, same store sales increased 9% to $77.3 million from the four week period ending on June 3, 2017. This pick up in sales is a major improvement for the specialty clothing brand as the retail industry has struggled with bringing customers into stores.

The gains of over 35% for CATO over the duration of the bullish forecast for the company highlight the accuracy of the I Know First algorithm.

Current I Know First subscribers received this bullish CATO forecast on May 23, 2018.

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Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster. This forecast was sent to current I Know First subscribers.

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The Cato Corporation, together with its subsidiaries, operates as a specialty retailer of fashion apparel and accessories in the Southeastern United States. It operates through two segments, Retail and Credit. The company’s stores and e-commerce Website offer a range of apparel and accessories, including dressy, career, and casual sportswear; and dresses, coats, shoes, lingerie, costume jewelry, and handbags for women. It also offers men’s wear, as well as lines for kids and newborns. The company operates its stores primarily under the Cato, Cato Fashions, Cato Plus, It’s Fashion, It’s Fashion Metro, and Versona names. As of January 30, 2016, it operated 1,372 stores in 32 states. The company also provides credit cards to its customers. The Cato Corporation was founded in 1946 and is headquartered in Charlotte, North Carolina.