Ascena Retail Group (NASDAQ: ASNA) and American Eagle Outfitters (NYSE:AEO) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitability.
Institutional & Insider Ownership
94.9% of Ascena Retail Group shares are owned by institutional investors. Comparatively, 83.5% of American Eagle Outfitters shares are owned by institutional investors. 8.0% of Ascena Retail Group shares are owned by insiders. Comparatively, 5.9% of American Eagle Outfitters shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Ascena Retail Group and American Eagle Outfitters’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Ascena Retail Group||$6.65 billion||0.06||-$1.07 billion||($5.48)||-0.37|
|American Eagle Outfitters||$3.61 billion||0.69||$212.44 million||$0.97||14.41|
American Eagle Outfitters has higher revenue, but lower earnings than Ascena Retail Group. Ascena Retail Group is trading at a lower price-to-earnings ratio than American Eagle Outfitters, indicating that it is currently the more affordable of the two stocks.
This table compares Ascena Retail Group and American Eagle Outfitters’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ascena Retail Group||-16.05%||3.13%||0.90%|
|American Eagle Outfitters||4.85%||18.25%||12.17%|
American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 3.6%. Ascena Retail Group does not pay a dividend. American Eagle Outfitters pays out 51.5% of its earnings in the form of a dividend.
This is a breakdown of recent ratings and price targets for Ascena Retail Group and American Eagle Outfitters, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ascena Retail Group||1||9||0||0||1.90|
|American Eagle Outfitters||2||7||10||0||2.42|
Ascena Retail Group presently has a consensus price target of $3.50, suggesting a potential upside of 74.13%. American Eagle Outfitters has a consensus price target of $14.76, suggesting a potential upside of 5.60%. Given Ascena Retail Group’s higher probable upside, equities research analysts plainly believe Ascena Retail Group is more favorable than American Eagle Outfitters.
Volatility and Risk
Ascena Retail Group has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.
American Eagle Outfitters beats Ascena Retail Group on 10 of the 16 factors compared between the two stocks.
About Ascena Retail Group
Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.
About American Eagle Outfitters
American Eagle Outfitters, Inc. (AEO Inc.) is a multi-brand specialty retailer. The Company offers a range of apparel and accessories for men and women under the American Eagle Outfitters Brand (AEO Brand), and intimates, apparel and personal care products for women under the Aerie brand. AEO Inc. operates stores in the United States, Canada, Mexico, Hong Kong, China and the United Kingdom. As of January 28, 2017, the Company operated over 1,000 retail stores and online at ae.com and aerie.com in the United States and internationally. Its company-owned retail stores are located in shopping malls, lifestyle centers and street locations in the United States, Canada, Mexico, China, Hong Kong and the United Kingdom. Its other brands include Tailgate and Todd Snyder New York. Tailgate is an apparel brand with a college town store concept. Todd Snyder New York is a menswear brand. As of January 28, 2017, the AEO brand operated 943 stores and online at www.ae.com.
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