Sequential Brands Group (NASDAQ: SQBG) and American Eagle Outfitters (NYSE:AEO) are both cyclical consumer goods & services companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.
Valuation and Earnings
This table compares Sequential Brands Group and American Eagle Outfitters’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Sequential Brands Group||$155.53 million||0.72||-$820,000.00||($0.38)||-4.68|
|American Eagle Outfitters||$3.61 billion||0.75||$212.44 million||$0.96||15.88|
American Eagle Outfitters has higher revenue and earnings than Sequential Brands Group. Sequential Brands Group is trading at a lower price-to-earnings ratio than American Eagle Outfitters, indicating that it is currently the more affordable of the two stocks.
This table compares Sequential Brands Group and American Eagle Outfitters’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sequential Brands Group||-14.35%||2.26%||0.85%|
|American Eagle Outfitters||4.85%||18.25%||12.17%|
This is a breakdown of current ratings for Sequential Brands Group and American Eagle Outfitters, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sequential Brands Group||0||4||3||0||2.43|
|American Eagle Outfitters||2||7||10||0||2.42|
Sequential Brands Group currently has a consensus price target of $6.92, suggesting a potential upside of 288.58%. American Eagle Outfitters has a consensus price target of $14.76, suggesting a potential downside of 3.13%. Given Sequential Brands Group’s stronger consensus rating and higher possible upside, research analysts clearly believe Sequential Brands Group is more favorable than American Eagle Outfitters.
Risk & Volatility
Sequential Brands Group has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.
Insider & Institutional Ownership
51.0% of Sequential Brands Group shares are owned by institutional investors. Comparatively, 81.6% of American Eagle Outfitters shares are owned by institutional investors. 27.3% of Sequential Brands Group shares are owned by company insiders. Comparatively, 5.9% of American Eagle Outfitters shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 3.3%. Sequential Brands Group does not pay a dividend. American Eagle Outfitters pays out 52.1% of its earnings in the form of a dividend.
American Eagle Outfitters beats Sequential Brands Group on 12 of the 16 factors compared between the two stocks.
Sequential Brands Group Company Profile
Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.
American Eagle Outfitters Company Profile
American Eagle Outfitters, Inc. (AEO Inc.) is a multi-brand specialty retailer. The Company offers a range of apparel and accessories for men and women under the American Eagle Outfitters Brand (AEO Brand), and intimates, apparel and personal care products for women under the Aerie brand. AEO Inc. operates stores in the United States, Canada, Mexico, Hong Kong, China and the United Kingdom. As of January 28, 2017, the Company operated over 1,000 retail stores and online at ae.com and aerie.com in the United States and internationally. Its company-owned retail stores are located in shopping malls, lifestyle centers and street locations in the United States, Canada, Mexico, China, Hong Kong and the United Kingdom. Its other brands include Tailgate and Todd Snyder New York. Tailgate is an apparel brand with a college town store concept. Todd Snyder New York is a menswear brand. As of January 28, 2017, the AEO brand operated 943 stores and online at www.ae.com.
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