Ascena Retail Group (NASDAQ: ASNA) and Abercrombie & Fitch (NYSE:ANF) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.
Risk and Volatility
Ascena Retail Group has a beta of 1.88, meaning that its share price is 88% more volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.
This is a summary of current ratings and target prices for Ascena Retail Group and Abercrombie & Fitch, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ascena Retail Group||1||9||0||0||1.90|
|Abercrombie & Fitch||6||13||3||0||1.86|
Ascena Retail Group presently has a consensus price target of $3.50, indicating a potential upside of 74.13%. Abercrombie & Fitch has a consensus price target of C$11.94, indicating a potential downside of 4.96%. Given Ascena Retail Group’s stronger consensus rating and higher probable upside, research analysts plainly believe Ascena Retail Group is more favorable than Abercrombie & Fitch.
Abercrombie & Fitch pays an annual dividend of C$0.80 per share and has a dividend yield of 6.4%. Ascena Retail Group does not pay a dividend. Abercrombie & Fitch pays out -258.1% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Ascena Retail Group and Abercrombie & Fitch’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Ascena Retail Group||$6.65 billion||0.06||-$1.07 billion||($5.48)||-0.37|
|Abercrombie & Fitch||$3.33 billion||0.26||$3.95 million||C($0.31)||-40.51|
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.
Institutional & Insider Ownership
94.8% of Ascena Retail Group shares are held by institutional investors. Comparatively, 97.6% of Abercrombie & Fitch shares are held by institutional investors. 8.0% of Ascena Retail Group shares are held by company insiders. Comparatively, 0.6% of Abercrombie & Fitch shares are held 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.
This table compares Ascena Retail Group and Abercrombie & Fitch’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ascena Retail Group||-16.05%||3.13%||0.90%|
|Abercrombie & Fitch||-0.62%||-0.79%||-0.42%|
Abercrombie & Fitch beats Ascena Retail Group on 8 of the 15 factors compared between the two stocks.
About Ascena Retail Group
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.
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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