Contrasting Hennes & Mauritz (OTCMKTS:HNNMY) & American Eagle Outfitters (NYSE:AEO)

American Eagle Outfitters (NYSE:AEO) and Hennes & Mauritz (OTCMKTS:HNNMY) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Valuation & Earnings

This table compares American Eagle Outfitters and Hennes & Mauritz”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Eagle Outfitters	$5.50 billion	0.61	$191.98 million	$1.96	10.17
Hennes & Mauritz	$23.01 billion	1.08	$1.23 billion	$0.17	20.82

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

Dividends

American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 2.5%. Hennes & Mauritz pays an annual dividend of $0.07 per share and has a dividend yield of 2.0%. American Eagle Outfitters pays out 25.5% of its earnings in the form of a dividend. Hennes & Mauritz pays out 41.2% 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.

Institutional and Insider Ownership

97.3% of American Eagle Outfitters shares are held by institutional investors. Comparatively, 0.0% of Hennes & Mauritz shares are held by institutional investors. 8.9% 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.

Profitability

This table compares American Eagle Outfitters and Hennes & Mauritz’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%
Hennes & Mauritz	5.94%	33.70%	7.80%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for American Eagle Outfitters and Hennes & Mauritz, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Eagle Outfitters	1	12	2	0	2.07
Hennes & Mauritz	3	4	0	0	1.57

American Eagle Outfitters presently has a consensus price target of $19.55, suggesting a potential downside of 1.92%. Given American Eagle Outfitters’ stronger consensus rating and higher possible upside, analysts plainly believe American Eagle Outfitters is more favorable than Hennes & Mauritz.

Risk & Volatility

American Eagle Outfitters has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Hennes & Mauritz has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Summary

American Eagle Outfitters beats Hennes & Mauritz on 11 of the 17 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 Hennes & Mauritz

H & M Hennes & Mauritz AB (publ) provides clothing, accessories, footwear, cosmetics, home textiles, and homeware for women, men, and children worldwide. It offers sportswear, shoes, bags, beauty products, activewear, jeans, and ready-to-wear; and interior products, including bed linens, dinnerware, textiles, furniture, and lighting. The company provides its products under the H&M, H&M HOME, H&M Move, H&M Beauty, COS, Weekday, Monki, & Other Stories, ARKET, Afound, and Singular Society brand names. In addition, it operates Sellpy, a broad digital platform for second-hand fashion and other products; and Creator Studio, a global platform for merchandise design and production, as well as provides solutions to extend the useful life of unwanted garments through reuse and recycling under Looper Textile name. The company offers its products through online and physical stores. H & M Hennes & Mauritz AB (publ) was incorporated in 1943 and is headquartered in Stockholm, Sweden.