American Eagle Outfitters (NYSE: AEO) and Buckle, Inc. (The) (NYSE:BKE) are both retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitabiliy, analyst recommendations, dividends and institutional ownership.

Insider and Institutional Ownership

89.9% of American Eagle Outfitters shares are held by institutional investors. Comparatively, 66.5% of Buckle, Inc. (The) shares are held by institutional investors. 5.8% of American Eagle Outfitters shares are held by company insiders. Comparatively, 41.7% of Buckle, Inc. (The) shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares American Eagle Outfitters and Buckle, Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Eagle Outfitters 5.44% 18.95% 12.56%
Buckle, Inc. (The) 9.66% 20.95% 15.68%

Earnings & Valuation

This table compares American Eagle Outfitters and Buckle, Inc. (The)’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Eagle Outfitters $3.62 billion 0.58 $496.35 million $1.08 10.92
Buckle, Inc. (The) $943.58 million 0.85 $174.08 million $1.88 8.80

American Eagle Outfitters has higher revenue and earnings than Buckle, Inc. (The). Buckle, Inc. (The) 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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for American Eagle Outfitters and Buckle, Inc. (The), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Eagle Outfitters 3 9 9 0 2.29
Buckle, Inc. (The) 1 1 0 0 1.50

American Eagle Outfitters presently has a consensus target price of $15.74, indicating a potential upside of 33.49%. Buckle, Inc. (The) has a consensus target price of $18.00, indicating a potential upside of 8.76%. Given American Eagle Outfitters’ stronger consensus rating and higher possible upside, analysts clearly believe American Eagle Outfitters is more favorable than Buckle, Inc. (The).

Volatility and Risk

American Eagle Outfitters has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Buckle, Inc. (The) has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Dividends

American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 4.2%. Buckle, Inc. (The) pays an annual dividend of $1.00 per share and has a dividend yield of 6.0%. American Eagle Outfitters pays out 46.3% of its earnings in the form of a dividend. Buckle, Inc. (The) pays out 53.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Buckle, Inc. (The) has raised its dividend for 3 consecutive years. Buckle, Inc. (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

American Eagle Outfitters beats Buckle, Inc. (The) on 9 of the 17 factors compared between the two stocks.

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.

About Buckle, Inc. (The)

The Buckle, Inc. is a retailer of casual apparel, footwear and accessories for young men and women. As of January 28, 2017, the Company operated 467 retail stores in 44 states throughout the United States under the names Buckle and The Buckle. The Company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. The Company provides customer services, such as free hemming, free gift-wrapping, easy layaways, the Buckle private label credit card, and a guest loyalty program. The Company offers denims from brands, such as Miss Me, Rock Revival, Big Star Vintage, Buffalo Jeans, KanCan, Flying Monkey and Levi’s. Its other brands include Hurley, Billabong, Affliction, American Fighter, Fast & Furious, Oakley, Fox, Puma, Obey, RVCA, Salvage, 7 Diamonds, Nixon, Amuse Society, Free People, White Crow, Corral, Reef, Kustom, Timberland, UGG, TOMS, SAXX, Stance, Lokai, Ray-Ban, and Fossil.

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