Vince Martin
Long/short equity, value, gambling

Cato Has Become A Value Trap

At Wednesday's close of $23.01, Cato Corporation (NYSE:CATO) looks like a solid buy. The company offers $6.44 in cash per share, and has guided for fiscal 2013 (ending January 2014) earnings per share of $1.64 to $1.93. Even at the low end of guidance, the stock is trading for barely 10 times earnings when backing out the company's substantial cash balance. Perhaps most impressively, the company's annual dividend sits at $1.20 per share, offering a 5.2 percent yield. (A brief note: CATO's yield is listed at many sites at $0.20 annually, or a 0.9% yield. In 2013, shareholders will receive a total of 20 cents per share in dividends. However, this is because the company accelerated payment of...

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