American Eagle Outfitters (NYSE:AEO – Get Free Report) and Fossil Group (NASDAQ:FOSL – Get Free Report) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitability, valuation and dividends.
Profitability
This table compares American Eagle Outfitters and Fossil Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Eagle Outfitters | 3.73% | 13.34% | 5.99% |
| Fossil Group | -8.55% | -23.80% | -4.76% |
Insider and Institutional Ownership
97.3% of American Eagle Outfitters shares are owned by institutional investors. Comparatively, 61.1% of Fossil Group shares are owned by institutional investors. 8.7% of American Eagle Outfitters shares are owned by insiders. Comparatively, 7.8% of Fossil Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Eagle Outfitters | 1 | 10 | 1 | 0 | 2.00 |
| Fossil Group | 0 | 0 | 1 | 0 | 3.00 |
American Eagle Outfitters currently has a consensus price target of $14.70, suggesting a potential upside of 42.58%. Fossil Group has a consensus price target of $5.00, suggesting a potential upside of 199.40%. Given Fossil Group’s stronger consensus rating and higher possible upside, analysts plainly believe Fossil Group is more favorable than American Eagle Outfitters.
Earnings & Valuation
This table compares American Eagle Outfitters and Fossil Group”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Eagle Outfitters | $5.33 billion | 0.34 | $329.38 million | $0.98 | 10.52 |
| Fossil Group | $1.15 billion | 0.08 | -$102.67 million | ($1.80) | -0.93 |
American Eagle Outfitters has higher revenue and earnings than Fossil Group. Fossil 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.
Volatility & Risk
American Eagle Outfitters has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, Fossil Group has a beta of 2.39, meaning that its share price is 139% more volatile than the S&P 500.
Summary
American Eagle Outfitters beats Fossil Group on 10 of the 13 factors compared between the two stocks.
About American Eagle Outfitters
American Eagle Outfitters, Inc. operates as a multi-brand specialty retailer in the United States and internationally. The company provides jeans, apparel and accessories, and personal care products for women and men under the American Eagle brand; and intimates, apparel, activewear, and swim collections under the Aerie and OFFLINE by Aerie brands. It also offers menswear products under the Todd Snyder New York brand; and fashion clothing and accessories under the Unsubscribed brand. The company sells its products through own and licensed retail stores; concession-based shops-within-shops; and digital channels, such as www.ae.com, www.aerie.com, www.toddsnyder.com, and www.unsubscribed.com. American Eagle Outfitters, Inc. was founded in 1977 and is headquartered in Pittsburgh, Pennsylvania.
About Fossil Group
Fossil Group, Inc., together with its subsidiaries, designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. The company’s products include traditional watches, smartwatches, jewelry, handbags, small leather goods, belts, and sunglasses. It also manufactures and distributes private label brands, as well as branded products purchased for resell in other branded retail stores. The company offers its products under its proprietary brands, such as FOSSIL, SKAGEN, MICHELE, RELIC, and ZODIAC; and under the licensed brands, including ARMANI EXCHANGE, DIESEL, DKNY, EMPORIO ARMANI, KATE SPADE NEW YORK, MICHAEL KORS, TORY BURCH, and Skechers. The company sells its products through company-owned retail and outlet stores, department and specialty retail stores, mass market stores, e-commerce sites, licensed and franchised FOSSIL retail stores, and retail concessions, as well as sells its products on airlines. The company was formerly known as Fossil, Inc. and changed its name to Fossil Group, Inc. in May 2013. Fossil Group, Inc. was founded in 1984 and is headquartered in Richardson, Texas.
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