Reviewing Abercrombie & Fitch (ANF) & Urban Outfitters (URBN)

Abercrombie & Fitch (NYSE: ANF) and Urban Outfitters (NASDAQ:URBN) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Abercrombie & Fitch and Urban Outfitters, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Abercrombie & Fitch 5 13 3 0 1.90
Urban Outfitters 3 16 6 0 2.12

Abercrombie & Fitch currently has a consensus price target of $12.00, indicating a potential downside of 10.25%. Urban Outfitters has a consensus price target of $22.00, indicating a potential downside of 4.35%. Given Urban Outfitters’ stronger consensus rating and higher possible upside, analysts plainly believe Urban Outfitters is more favorable than Abercrombie & Fitch.

Profitability

This table compares Abercrombie & Fitch and Urban Outfitters’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Abercrombie & Fitch -0.62% -0.79% -0.42%
Urban Outfitters 4.92% 13.61% 9.27%

Dividends

Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 6.0%. Urban Outfitters does not pay a dividend. Abercrombie & Fitch pays out -258.1% of its earnings in the form of a dividend.

Risk & Volatility

Abercrombie & Fitch has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Urban Outfitters has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Insider & Institutional Ownership

98.2% of Abercrombie & Fitch shares are owned by institutional investors. Comparatively, 87.6% of Urban Outfitters shares are owned by institutional investors. 0.6% of Abercrombie & Fitch shares are owned by company insiders. Comparatively, 26.3% of Urban Outfitters shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Abercrombie & Fitch and Urban Outfitters’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Abercrombie & Fitch $3.30 billion 0.28 $181.74 million ($0.31) -43.13
Urban Outfitters $3.53 billion 0.72 $407.95 million $1.49 15.44

Urban Outfitters has higher revenue and earnings than Abercrombie & Fitch. Abercrombie & Fitch is trading at a lower price-to-earnings ratio than Urban Outfitters, indicating that it is currently the more affordable of the two stocks.

Summary

Urban Outfitters beats Abercrombie & Fitch on 11 of the 15 factors compared between the two stocks.

About Abercrombie & Fitch

Abercrombie & Fitch Co. is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company operates through two segments: Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands, and Hollister, which includes the Company’s Hollister and Gilly Hicks brands. The Company offers an array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear, and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. As of January 28, 2017, the Company operated 709 stores in the United States and 189 stores outside of the United States.

About Urban Outfitters

Urban Outfitters, Inc. is a lifestyle specialty retail company. The Company operates through two segments: Retail and Wholesale. The Company’s Retail segment consists of its Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn brands, whose merchandise is sold to its customers through retail stores, Websites, mobile applications, catalogs and customer contact centers. The Retail segment also includes Vetri Family, which operates restaurants under the names Amis, Alla Spina, Lo Spiedo, Pizzeria Vetri and Osteria. Its Wholesale segment consists of the Free People wholesale division that primarily designs, develops and markets young women’s contemporary casual apparel and shoes through individual and chain specialty stores and department stores. The Company’s Wholesale segment includes Free People-branded tops, bottoms, sweaters, dresses, intimates, shoes and activewear, which are sold through department and specialty stores around the world, and its Free People stores.

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