Financial Review: Winmark (NASDAQ:WINA) and Abercrombie & Fitch (NYSE:ANF)

Abercrombie & Fitch (NYSE:ANF) and Winmark (NASDAQ:WINA) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Earnings and Valuation

This table compares Abercrombie & Fitch and Winmark”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abercrombie & Fitch	$5.27 billion	1.09	$506.92 million	$11.68	11.53
Winmark	$86.53 million	12.15	$41.65 million	$11.02	26.57

Abercrombie & Fitch has higher revenue and earnings than Winmark. Abercrombie & Fitch is trading at a lower price-to-earnings ratio than Winmark, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Abercrombie & Fitch and Winmark’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Abercrombie & Fitch	10.03%	33.52%	13.05%
Winmark	47.09%	-99.47%	103.54%

Analyst Recommendations

This is a summary of current recommendations for Abercrombie & Fitch and Winmark, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abercrombie & Fitch	0	5	8	2	2.80
Winmark	0	1	0	0	2.00

Abercrombie & Fitch presently has a consensus target price of $155.38, suggesting a potential upside of 15.35%. Given Abercrombie & Fitch’s stronger consensus rating and higher probable upside, research analysts clearly believe Abercrombie & Fitch is more favorable than Winmark.

Institutional and Insider Ownership

73.3% of Winmark shares are held by institutional investors. 2.3% of Abercrombie & Fitch shares are held by company insiders. Comparatively, 10.4% of Winmark shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Abercrombie & Fitch has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Winmark has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500.

Summary

Abercrombie & Fitch beats Winmark on 9 of the 15 factors compared between the two stocks.

About Abercrombie & Fitch

Abercrombie & Fitch Co. engages in the retail of apparel, personal care products, and accessories. The firm operates through following geographical segments: Americas, EMEA and APAC. The Americas segment includes operations in North America and South America. The EMEA segment includes operations in Europe, the Middle East and Africa. The APAC segment includes operations in the Asia-Pacific region, including Asia and Oceania. The company was founded by David Abercrombie in 1892 and is headquartered in New Albany, OH.

About Winmark

Winmark Corporation, a resale company operates as a franchisor for small business in the United States and Canada. The company franchises retail stores concepts that buy, sell and trade merchandise. It also operates middle-market equipment leasing business. In addition, the company buys and sells used clothing and accessories geared toward the teenage and young adult market under Plato’s Closet brand; and operates stores which buys and sells used and new children’s clothing, toys, furniture, equipment, and accessories primarily to parents of children ages infant to 12 years under the Once Upon A Child brand. Further, it buys, sells, trades in, and used and new sporting goods, equipment, and accessories for various athletic activities including team sports, such as baseball/softball, hockey, football, lacrosse, and soccer, as well as fitness, ski/snowboard, golf, and others under the Play It Again Sports brand; and buys and sells used women’s apparel, shoes, and accessories under the Style Encore brand. Additionally, the company buys, sells, trades in, and used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories under the Music Go Round brand. Winmark Corporation was incorporated in 1988 and is headquartered in Minneapolis, Minnesota.