Abercrombie & Fitch (NYSE:ANF) vs. Shoe Carnival (NASDAQ:SCVL) Critical Analysis

Shoe Carnival (NASDAQ:SCVL) and Abercrombie & Fitch (NYSE:ANF) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Dividends

Shoe Carnival pays an annual dividend of $0.60 per share and has a dividend yield of 2.9%. Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. Shoe Carnival pays out 25.1% of its earnings in the form of a dividend. Abercrombie & Fitch pays out 7.9% 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. Shoe Carnival has increased its dividend for 14 consecutive years. Shoe Carnival is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Shoe Carnival has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500.

Insider & Institutional Ownership

66.1% of Shoe Carnival shares are owned by institutional investors. 35.5% of Shoe Carnival shares are owned by insiders. Comparatively, 2.3% of Abercrombie & Fitch shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Shoe Carnival and Abercrombie & Fitch’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shoe Carnival	5.58%	10.43%	5.92%
Abercrombie & Fitch	10.60%	42.32%	16.76%

Valuation & Earnings

This table compares Shoe Carnival and Abercrombie & Fitch”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shoe Carnival	$1.20 billion	0.47	$73.77 million	$2.39	8.67
Abercrombie & Fitch	$5.03 billion	0.89	$566.22 million	$10.16	9.24

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Shoe Carnival and Abercrombie & Fitch, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shoe Carnival	0	0	1	0	3.00
Abercrombie & Fitch	0	2	6	0	2.75

Shoe Carnival currently has a consensus target price of $51.00, indicating a potential upside of 146.14%. Abercrombie & Fitch has a consensus target price of $111.8750, indicating a potential upside of 19.12%. Given Shoe Carnival’s stronger consensus rating and higher probable upside, analysts clearly believe Shoe Carnival is more favorable than Abercrombie & Fitch.

Summary

Abercrombie & Fitch beats Shoe Carnival on 11 of the 17 factors compared between the two stocks.

About Shoe Carnival

Shoe Carnival, Inc., together with its subsidiaries, operates as a family footwear retailer in the United States. The company offers range of dress, casual, work, and athletic shoes, as well as sandals and boots for men, women, and children; and various accessories. The company also operates stores, and sells its products through online shopping at shoecarnival.com, as well as through mobile app. Shoe Carnival, Inc. was founded in 1978 and is headquartered in Evansville, Indiana.

About Abercrombie & Fitch

Abercrombie & Fitch Co. engages in the retail of apparel, personal care products, and accessories. The firm operates through following geographical segments: Americas, EMEA and APAC. The Americas segment includes operations in North America and South America. The EMEA segment includes operations in Europe, the Middle East and Africa. The APAC segment includes operations in the Asia-Pacific region, including Asia and Oceania. The company was founded by David Abercrombie in 1892 and is headquartered in New Albany, OH.