Sequential Brands Group (NASDAQ: SQBG) and Abercrombie & Fitch (NYSE:ANF) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitabiliy.

Institutional and Insider Ownership

55.0% of Sequential Brands Group shares are owned by institutional investors. 27.3% of Sequential Brands Group shares are owned by insiders. Comparatively, 0.9% of Abercrombie & Fitch shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings for Sequential Brands Group and Abercrombie & Fitch, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sequential Brands Group 0 2 6 0 2.75
Abercrombie & Fitch 9 12 3 0 1.75

Sequential Brands Group presently has a consensus price target of $9.71, suggesting a potential upside of 219.55%. Abercrombie & Fitch has a consensus price target of $13.95, suggesting a potential upside of 36.23%. Given Sequential Brands Group’s stronger consensus rating and higher possible upside, analysts clearly believe Sequential Brands Group is more favorable than Abercrombie & Fitch.

Valuation & Earnings

This table compares Sequential Brands Group and Abercrombie & Fitch’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sequential Brands Group $168.91 million 1.13 $101.73 million $0.02 152.08
Abercrombie & Fitch $3.30 billion 0.21 $181.49 million ($0.27) -37.92

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

Volatility & Risk

Sequential Brands Group has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Sequential Brands Group 0.99% 1.29% 0.48%
Abercrombie & Fitch -0.55% -1.26% -0.67%

Dividends

Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 7.8%. Sequential Brands Group does not pay a dividend. Abercrombie & Fitch pays out -296.3% of its earnings in the form of a dividend.

Summary

Sequential Brands Group beats Abercrombie & Fitch on 10 of the 15 factors compared between the two stocks.

Sequential Brands Group Company Profile

Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.

Abercrombie & Fitch Company Profile

Abercrombie & Fitch Co. is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company operates through two segments: Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands, and Hollister, which includes the Company’s Hollister and Gilly Hicks brands. The Company offers an array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear, and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. As of January 28, 2017, the Company operated 709 stores in the United States and 189 stores outside of the United States.

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