Lands’ End (NASDAQ: LE) and American Eagle Outfitters (NYSE:AEO) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Dividends

American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 4.0%. Lands’ End does not pay a dividend. American Eagle Outfitters pays out 51.5% of its earnings in the form of a dividend.

Profitability

This table compares Lands’ End and American Eagle Outfitters’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lands’ End -8.48% -0.71% -0.18%
American Eagle Outfitters 4.85% 18.25% 12.17%

Institutional and Insider Ownership

60.6% of Lands’ End shares are held by institutional investors. Comparatively, 83.9% of American Eagle Outfitters shares are held by institutional investors. 0.5% of Lands’ End shares are held by company insiders. Comparatively, 5.8% of American Eagle Outfitters shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Lands’ End and American Eagle Outfitters’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lands’ End $1.33 billion 0.27 $39.91 million ($3.55) -3.20
American Eagle Outfitters $3.64 billion 0.60 $479.75 million $0.97 12.77

American Eagle Outfitters has higher revenue and earnings than Lands’ End. Lands’ End 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.

Risk and Volatility

Lands’ End has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Lands’ End and American Eagle Outfitters, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lands’ End 0 2 0 0 2.00
American Eagle Outfitters 3 8 9 0 2.30

Lands’ End presently has a consensus target price of $15.00, suggesting a potential upside of 32.16%. American Eagle Outfitters has a consensus target price of $15.03, suggesting a potential upside of 21.27%. Given Lands’ End’s higher possible upside, research analysts plainly believe Lands’ End is more favorable than American Eagle Outfitters.

Summary

American Eagle Outfitters beats Lands’ End on 13 of the 15 factors compared between the two stocks.

About Lands’ End

Lands’ End, Inc. (Lands’ End) is a multi-channel retailer of casual clothing, accessories and footwear, as well as home products. The Company operates through two segments: Direct and Retail. The Company offers products through catalogs, online at www.landsend.com. The Direct segment sells products through the Company’s e-commerce Websites, international Websites and direct mail catalogs. The Retail segment sells products and services through Lands’ End Shops at Sears across the United States, the Company’s standalone Lands’ End Inlet stores and international shop-in-shops. The Company’s product categories include Apparel and Non-apparel. The Non-apparel category offers accessories, footwear and home goods. The Company provides embroidery, monogramming, gift wrapping, shipping and other services. In addition, the Company offers sheets and pillowcases, duvet covers and comforters, blankets and throws, mattress pads, towels, rugs and mats, school uniforms and shower curtains.

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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