Deep Value: cash covers more than 100% of the stock price

This company holds roughly $96M in cash and investments — more than its entire stock-market value, based on its latest quarterly filing. You're paying very little for the actual business. Sometimes that's a genuine bargain or a takeover target, sometimes it's cheap for a reason. Not a buy signal on its own — always ask why it's this cheap.

The Cato Corporation

CATO

Apparel - Retail · Consumer Cyclical

Winston Score

Winston is worried

Weak fundamentals across most pillars.

Data as of Aug 23, 2026 · filings through May 2, 2026

How the score breaks down

Quality

Weak

Growth

Mixed

Cash Flow

Weak

Stability

Mixed

Valuation

Data not available

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Winston Score History

The full picture

The Cato Corporation is a discount clothing retailer that sells affordable fashion for women and children. Its stores, operating mainly under the Cato and Versona brand names, carry clothing, shoes, and accessories targeted at budget-conscious shoppers. The company focuses on value-priced merchandise, competing in the low-end apparel retail space alongside chains like Ross and Burlington.

Cato makes money by buying clothing at low cost and selling it in its physical stores, with no significant e-commerce business. It operates roughly 1,300 stores concentrated in the southeastern United States, primarily in small towns and suburban strip malls. The company's tiny ROIC and negative operating margin signal that it is currently struggling to cover its costs, and its main risk is continued pressure from online discount retailers and shifting consumer spending habits that make it harder for small-format, store-only retailers to stay profitable.

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

-4.0% YoY

YoY Growth Rate

Revenue declining

EPS Growth

+24.7% YoY

YoY Growth Rate

Steady EPS growth

Insider Activity

19.2%ownership

→ Flat

Insider ownership roughly steady over the past year

Cash Runway

~3 years

$76M cash & investments

Quarterly Free Cash Flow

↑ Burn rate improving

$76M cash & investments at current burn rate

Revenue declining

The Cato Corporation's revenue is actually shrinking. In a growth stock, that removes the core investment thesis. The low Winston Score here may be warranted — unless there's a turnaround story.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

Each metric is explained in plain language so you know exactly what you're looking at. Start your free trial now.

Quality

Profit per sale

Gross Margin

36.5%

Modest — 36.5% gross margin

Profit after running costs

Operating Margin

5.0%

Thin — 5.0% operating margin

Return on the money invested

ROCE

-3.9%

Weak — -3.9% return on capital

Negative ROIC means the business is losing money on every dollar invested in it.

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Growth

Sales growth

Sales YoY

+1.8%

Nearly flat sales (+1.8% YoY)

Profit growth

EPS YoY

N/A

Data not available

How steady the profit is

EPS Consistency

5/8 quarters

Mixed — about half the quarters showed growth

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Cash Flow

Profit that turns into cash

Cash Conversion

N/A

Data not available

Spare cash per sale

FCF Margin

-0.2%

Burning cash (-0.2%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

What it owes vs what it owns

Debt / Equity

0.31

Conservative — low debt load (0.31)

Covers its interest

Interest Cover

N/A

Data not available

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Valuation

Price vs profit

P/E Ratio (TTM)

N/M

no trend

Negative earnings — P/E not meaningful

Cheaper or dearer next year

P/E vs Forward

N/A

not available

Data not available

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Dividends

Not applicable for this business.

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