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

Risk and Volatility

Abercrombie & Fitch has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Ascena Retail Group has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500.

Insider and Institutional Ownership

98.5% of Abercrombie & Fitch shares are held by institutional investors. Comparatively, 94.9% of Ascena Retail Group shares are held by institutional investors. 0.6% of Abercrombie & Fitch shares are held by insiders. Comparatively, 8.0% of Ascena Retail Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Abercrombie & Fitch and Ascena Retail Group’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%
Ascena Retail Group -16.05% 3.13% 0.90%

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Abercrombie & Fitch $3.33 billion 0.26 $3.95 million ($0.31) -40.81
Ascena Retail Group $6.65 billion 0.06 -$1.07 billion ($5.48) -0.37

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

Dividends

Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 6.3%. Ascena Retail Group does not pay a dividend. Abercrombie & Fitch pays out -258.1% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current recommendations and price targets for Abercrombie & Fitch and Ascena Retail Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Abercrombie & Fitch 6 13 3 0 1.86
Ascena Retail Group 1 9 0 0 1.90

Abercrombie & Fitch currently has a consensus target price of $11.94, suggesting a potential downside of 5.63%. Ascena Retail Group has a consensus target price of $3.50, suggesting a potential upside of 74.13%. Given Ascena Retail Group’s stronger consensus rating and higher possible upside, analysts plainly believe Ascena Retail Group is more favorable than Abercrombie & Fitch.

Summary

Abercrombie & Fitch beats Ascena Retail Group on 8 of the 15 factors compared between the two stocks.

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.

Ascena Retail Group Company Profile

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

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