Abercrombie & Fitch (NYSE: ANF) and Buckle, Inc. (The) (NYSE:BKE) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Abercrombie & Fitch and Buckle, Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Abercrombie & Fitch -0.62% -0.79% -0.42%
Buckle, Inc. (The) 9.40% 19.96% 15.04%

Analyst Ratings

This is a summary of recent recommendations for Abercrombie & Fitch and Buckle, Inc. (The), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Abercrombie & Fitch 7 12 3 0 1.82
Buckle, Inc. (The) 1 0 0 0 1.00

Abercrombie & Fitch presently has a consensus price target of $12.12, suggesting a potential downside of 10.37%. Buckle, Inc. (The) has a consensus price target of $13.00, suggesting a potential downside of 9.41%. Given Buckle, Inc. (The)’s higher probable upside, analysts plainly believe Buckle, Inc. (The) is more favorable than Abercrombie & Fitch.

Earnings and Valuation

This table compares Abercrombie & Fitch and Buckle, Inc. (The)’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Abercrombie & Fitch $3.30 billion 0.28 $184.97 million ($0.31) -43.61
Buckle, Inc. (The) $927.07 million 0.75 $167.05 million $1.80 7.97

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

Risk and Volatility

Abercrombie & Fitch has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Buckle, Inc. (The) has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Dividends

Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 5.9%. Buckle, Inc. (The) pays an annual dividend of $1.00 per share and has a dividend yield of 7.0%. Abercrombie & Fitch pays out -258.1% of its earnings in the form of a dividend. Buckle, Inc. (The) pays out 55.6% 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. Buckle, Inc. (The) has increased its dividend for 3 consecutive years. Buckle, Inc. (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

98.6% of Abercrombie & Fitch shares are owned by institutional investors. Comparatively, 59.5% of Buckle, Inc. (The) shares are owned by institutional investors. 0.9% of Abercrombie & Fitch shares are owned by company insiders. Comparatively, 41.7% of Buckle, Inc. (The) shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Buckle, Inc. (The) beats Abercrombie & Fitch on 10 of the 16 factors compared between the two stocks.

About Abercrombie & Fitch

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.

About Buckle, Inc. (The)

The Buckle, Inc. is a retailer of casual apparel, footwear and accessories for young men and women. As of January 28, 2017, the Company operated 467 retail stores in 44 states throughout the United States under the names Buckle and The Buckle. The Company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. The Company provides customer services, such as free hemming, free gift-wrapping, easy layaways, the Buckle private label credit card, and a guest loyalty program. The Company offers denims from brands, such as Miss Me, Rock Revival, Big Star Vintage, Buffalo Jeans, KanCan, Flying Monkey and Levi’s. Its other brands include Hurley, Billabong, Affliction, American Fighter, Fast & Furious, Oakley, Fox, Puma, Obey, RVCA, Salvage, 7 Diamonds, Nixon, Amuse Society, Free People, White Crow, Corral, Reef, Kustom, Timberland, UGG, TOMS, SAXX, Stance, Lokai, Ray-Ban, and Fossil.

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