Reviewing ATRenew (NYSE:RERE) & American Eagle Outfitters (NYSE:AEO)

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

Institutional & Insider Ownership

97.3% of American Eagle Outfitters shares are owned by institutional investors. Comparatively, 19.3% of ATRenew shares are owned by institutional investors. 8.9% of American Eagle Outfitters shares are owned by company insiders. Comparatively, 10.7% of ATRenew 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.

Risk & Volatility

American Eagle Outfitters has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, ATRenew has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Eagle Outfitters	5.91%	23.63%	9.59%
ATRenew	2.01%	12.32%	8.30%

Dividends

American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 2.8%. ATRenew pays an annual dividend of $0.10 per share and has a dividend yield of 2.6%. American Eagle Outfitters pays out 25.5% of its earnings in the form of a dividend. ATRenew pays out 34.5% 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. American Eagle Outfitters has raised its dividend for 2 consecutive years. American Eagle Outfitters is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for American Eagle Outfitters and ATRenew, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Eagle Outfitters	1	11	2	0	2.07
ATRenew	0	1	2	0	2.67

American Eagle Outfitters currently has a consensus target price of $19.55, indicating a potential upside of 8.86%. ATRenew has a consensus target price of $5.50, indicating a potential upside of 40.85%. Given ATRenew’s stronger consensus rating and higher possible upside, analysts plainly believe ATRenew is more favorable than American Eagle Outfitters.

Earnings & Valuation

This table compares American Eagle Outfitters and ATRenew”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Eagle Outfitters	$5.50 billion	0.55	$191.98 million	$1.96	9.16
ATRenew	$3.01 billion	0.28	$48.09 million	$0.29	13.47

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

Summary

American Eagle Outfitters beats ATRenew on 12 of the 16 factors compared between the two stocks.

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.

About ATRenew

ATRenew Inc., through its subsidiaries, operates pre-owned consumer electronics transactions and services platform in the People's Republic of China. It primarily sells mobile phones, laptops, tablets, drones, digital cameras; and vintage bags, watches, liquor, gold, and various household goods through its online platforms and offline stores, as well as provides services to third-party merchants to sell the products through its platforms. The company was formerly known as AiHuiShou International Co. Ltd. and changed its name to ATRenew Inc. November 2021. The company was incorporated in 2011 and is headquartered in Shanghai, the People's Republic of China.