Urban Outfitters (NASDAQ: URBN) and Abercrombie & Fitch (NYSE:ANF) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Earnings & Valuation

This table compares Urban Outfitters and Abercrombie & Fitch’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Urban Outfitters $3.53 billion 0.73 $407.95 million $1.49 15.68
Abercrombie & Fitch $3.30 billion 0.29 $181.74 million ($0.31) -44.93

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

Risk and Volatility

Urban Outfitters has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 0.78, suggesting that its share price is 22% 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 5.7%. Urban Outfitters does not pay a dividend. Abercrombie & Fitch pays out -258.1% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Urban Outfitters and Abercrombie & Fitch, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Urban Outfitters 2 17 6 0 2.16
Abercrombie & Fitch 7 12 3 0 1.82

Urban Outfitters currently has a consensus price target of $21.95, suggesting a potential downside of 6.06%. Abercrombie & Fitch has a consensus price target of $12.12, suggesting a potential downside of 13.01%. Given Urban Outfitters’ stronger consensus rating and higher possible upside, research analysts plainly believe Urban Outfitters is more favorable than Abercrombie & Fitch.

Profitability

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

Net Margins Return on Equity Return on Assets
Urban Outfitters 4.92% 13.61% 9.27%
Abercrombie & Fitch -0.62% -0.79% -0.42%

Insider and Institutional Ownership

87.6% of Urban Outfitters shares are owned by institutional investors. Comparatively, 98.5% of Abercrombie & Fitch shares are owned by institutional investors. 26.3% of Urban Outfitters shares are owned by company insiders. Comparatively, 0.9% of Abercrombie & Fitch shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Urban Outfitters beats Abercrombie & Fitch on 11 of the 15 factors compared between the two stocks.

About Urban Outfitters

Urban Outfitters, Inc. is a lifestyle specialty retail company. The Company operates through two segments: Retail and Wholesale. The Company’s Retail segment consists of its Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn brands, whose merchandise is sold to its customers through retail stores, Websites, mobile applications, catalogs and customer contact centers. The Retail segment also includes Vetri Family, which operates restaurants under the names Amis, Alla Spina, Lo Spiedo, Pizzeria Vetri and Osteria. Its Wholesale segment consists of the Free People wholesale division that primarily designs, develops and markets young women’s contemporary casual apparel and shoes through individual and chain specialty stores and department stores. The Company’s Wholesale segment includes Free People-branded tops, bottoms, sweaters, dresses, intimates, shoes and activewear, which are sold through department and specialty stores around the world, and its Free People stores.

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.

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