Critical Comparison: Buckle, Inc. (The) (BKE) & Abercrombie & Fitch (ANF)

Buckle, Inc. (The) (NYSE: BKE) and Abercrombie & Fitch (NYSE:ANF) 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 earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Insider and Institutional Ownership

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

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Buckle, Inc. (The) $927.07 million 0.75 $167.05 million $1.80 8.06
Abercrombie & Fitch $3.30 billion 0.29 $184.97 million ($0.31) -45.32

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.

Dividends

Buckle, Inc. (The) pays an annual dividend of $1.00 per share and has a dividend yield of 6.9%. Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 5.7%. Buckle, Inc. (The) pays out 55.6% of its earnings in the form of a dividend. Abercrombie & Fitch pays out -258.1% 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. Abercrombie & Fitch has raised its dividend for 3 consecutive years.

Analyst Recommendations

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

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

Buckle, Inc. (The) presently has a consensus target price of $13.00, suggesting a potential downside of 10.34%. Abercrombie & Fitch has a consensus target price of $12.12, suggesting a potential downside of 13.75%. Given Buckle, Inc. (The)’s higher probable upside, equities research analysts plainly believe Buckle, Inc. (The) is more favorable than Abercrombie & Fitch.

Profitability

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

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

Risk and Volatility

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

Summary

Buckle, Inc. (The) beats Abercrombie & Fitch on 9 of the 16 factors compared between the two stocks.

Buckle, Inc. (The) Company Profile

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.

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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