Critical Comparison: American Eagle Outfitters (NYSE:AEO) versus Immersion (NASDAQ:IMMR)

Immersion (NASDAQ:IMMR) and American Eagle Outfitters (NYSE:AEO) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, risk, earnings, profitability, analyst recommendations, dividends and valuation.

Volatility & Risk

Immersion has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.

Dividends

Immersion pays an annual dividend of $0.30 per share and has a dividend yield of 3.9%. American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 2.9%. Immersion pays out 214.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Eagle Outfitters pays out 30.9% of its earnings in the form of a dividend. American Eagle Outfitters has raised its dividend for 2 consecutive years.

Earnings & Valuation

This table compares Immersion and American Eagle Outfitters”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Immersion	$1.73 billion	0.15	$4.52 million	$0.14	54.50
American Eagle Outfitters	$5.50 billion	0.53	$191.98 million	$1.62	10.64

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Immersion	0.26%	0.80%	0.35%
American Eagle Outfitters	5.01%	20.95%	8.34%

Insider & Institutional Ownership

60.6% of Immersion shares are held by institutional investors. Comparatively, 97.3% of American Eagle Outfitters shares are held by institutional investors. 10.6% of Immersion shares are held by insiders. Comparatively, 8.9% of American Eagle Outfitters shares are held 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.

Analyst Recommendations

This is a summary of recent ratings for Immersion and American Eagle Outfitters, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Immersion	0	2	1	0	2.33
American Eagle Outfitters	1	11	2	0	2.07

Immersion presently has a consensus target price of $13.50, suggesting a potential upside of 76.93%. American Eagle Outfitters has a consensus target price of $20.40, suggesting a potential upside of 18.33%. Given Immersion’s stronger consensus rating and higher probable upside, analysts plainly believe Immersion is more favorable than American Eagle Outfitters.

Summary

American Eagle Outfitters beats Immersion on 12 of the 17 factors compared between the two stocks.

About Immersion

Immersion Corporation, together with its subsidiaries, engages in the creation, design, development, and licensing of haptic technologies that allow people to use their sense of touch to engage with and experience various digital products in North America, Europe, and Asia. The company provides technology, patent, and combined licenses. It serves markets, including mobility, gaming, automotive, virtual and augmented reality, and wearables, as well as residential, commercial, and industrial Internet of Things. The company was incorporated in 1993 and is headquartered in Aventura, Florida.

About American Eagle Outfitters

American Eagle Outfitters, Inc. operates as a multi-brand specialty retailer in the United States and internationally. The company provides jeans, apparel and accessories, and personal care products for women and men under the American Eagle brand; and intimates, apparel, activewear, and swim collections under the Aerie and OFFLINE by Aerie brands. It also offers menswear products under the Todd Snyder New York brand; and fashion clothing and accessories under the Unsubscribed brand. The company sells its products through own and licensed retail stores; concession-based shops-within-shops; and digital channels, such as www.ae.com, www.aerie.com, www.toddsnyder.com, and www.unsubscribed.com. American Eagle Outfitters, Inc. was founded in 1977 and is headquartered in Pittsburgh, Pennsylvania.