American Eagle Outfitters (NYSE: AEO) and Stage Stores (NYSE:SSI) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, valuation, earnings and dividends.

Valuation & Earnings

This table compares American Eagle Outfitters and Stage Stores’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Eagle Outfitters $3.61 billion 0.87 $212.44 million $0.92 19.24
Stage Stores $1.44 billion 0.03 -$37.89 million ($1.82) -0.96

American Eagle Outfitters has higher revenue and earnings than Stage Stores. Stage Stores 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.

Volatility and Risk

American Eagle Outfitters has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, Stage Stores has a beta of 1.35, meaning that its stock price is 35% more 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 2.8%. Stage Stores pays an annual dividend of $0.20 per share and has a dividend yield of 11.4%. American Eagle Outfitters pays out 54.3% of its earnings in the form of a dividend. Stage Stores pays out -11.0% 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. Stage Stores is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

83.2% of American Eagle Outfitters shares are owned by institutional investors. Comparatively, 52.9% of Stage Stores shares are owned by institutional investors. 5.9% of American Eagle Outfitters shares are owned by insiders. Comparatively, 7.4% of Stage Stores shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
American Eagle Outfitters 4.50% 17.42% 11.63%
Stage Stores -3.33% -8.67% -3.56%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for American Eagle Outfitters and Stage Stores, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Eagle Outfitters 1 6 9 0 2.50
Stage Stores 1 1 0 0 1.50

American Eagle Outfitters presently has a consensus target price of $16.25, indicating a potential downside of 8.19%. Stage Stores has a consensus target price of $1.00, indicating a potential downside of 42.86%. Given American Eagle Outfitters’ stronger consensus rating and higher possible upside, research analysts clearly believe American Eagle Outfitters is more favorable than Stage Stores.

Summary

American Eagle Outfitters beats Stage Stores on 11 of the 15 factors compared between the two stocks.

American Eagle Outfitters Company Profile

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.

Stage Stores Company Profile

Stage Stores, Inc. operates specialty department stores mainly in small and mid-sized towns and communities. The Company’s department stores offer a range of brand name and private label apparel, accessories, cosmetics, footwear and home goods. The Company operates approximately 830 specialty department stores in over 40 states under the BEALLS, GOODY’S, PALAIS ROYAL, PEEBLES and STAGE nameplates and a direct-to-consumer business. The Company’s direct-to-consumer business consists of its e-commerce Website and Send program. The Company’s e-commerce Website includes a range of merchandise categories found in its stores, as well as other product offerings. The Company’s in-store Send program allows customers to have merchandise shipped directly to their homes if the preferred size or color is not available in their local store. The Company’s private label portfolio brands are developed and sourced through agreements with third-party vendors.

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