Comparing American Eagle Outfitters (NYSE:AEO) & Rent the Runway (NASDAQ:RENT)

American Eagle Outfitters (NYSE:AEO) and Rent the Runway (NASDAQ:RENT) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Profitability

This table compares American Eagle Outfitters and Rent the Runway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Eagle Outfitters	3.49%	16.76%	6.62%
Rent the Runway	6.85%	N/A	-32.17%

Valuation & Earnings

This table compares American Eagle Outfitters and Rent the Runway”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Eagle Outfitters	$5.50 billion	0.60	$191.98 million	$1.12	17.72
Rent the Runway	$329.80 million	0.50	$22.60 million	$0.48	10.31

American Eagle Outfitters has higher revenue and earnings than Rent the Runway. Rent the Runway 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.

Institutional & Insider Ownership

97.3% of American Eagle Outfitters shares are owned by institutional investors. Comparatively, 73.1% of Rent the Runway shares are owned by institutional investors. 8.7% of American Eagle Outfitters shares are owned by company insiders. Comparatively, 8.2% of Rent the Runway shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

American Eagle Outfitters has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500. Comparatively, Rent the Runway has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for American Eagle Outfitters and Rent the Runway, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Eagle Outfitters	2	13	1	0	1.94
Rent the Runway	1	0	0	0	1.00

American Eagle Outfitters presently has a consensus price target of $21.75, suggesting a potential upside of 9.62%. Given American Eagle Outfitters’ stronger consensus rating and higher possible upside, equities analysts plainly believe American Eagle Outfitters is more favorable than Rent the Runway.

Summary

American Eagle Outfitters beats Rent the Runway on 13 of the 14 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 Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.