Analyzing American Eagle Outfitters (NYSE:AEO) and Zumiez (NASDAQ:ZUMZ)

Zumiez (NASDAQ:ZUMZ) and American Eagle Outfitters (NYSE:AEO) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.

Valuation and Earnings

This table compares Zumiez and American Eagle Outfitters”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zumiez	$929.06 million	0.22	$13.38 million	$0.72	18.58
American Eagle Outfitters	$5.50 billion	0.45	$191.98 million	$1.96	7.53

American Eagle Outfitters has higher revenue and earnings than Zumiez. American Eagle Outfitters is trading at a lower price-to-earnings ratio than Zumiez, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

95.5% of Zumiez shares are held by institutional investors. Comparatively, 97.3% of American Eagle Outfitters shares are held by institutional investors. 24.3% of Zumiez shares are held by company insiders. Comparatively, 8.9% of American Eagle Outfitters shares are held 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.

Risk and Volatility

Zumiez has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, American Eagle Outfitters has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500.

Profitability

This table compares Zumiez and American Eagle Outfitters’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zumiez	1.36%	3.71%	1.78%
American Eagle Outfitters	5.91%	23.63%	9.59%

Analyst Recommendations

This is a summary of current recommendations and price targets for Zumiez and American Eagle Outfitters, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zumiez	0	3	0	0	2.00
American Eagle Outfitters	1	11	2	1	2.20

American Eagle Outfitters has a consensus price target of $19.36, indicating a potential upside of 31.18%. Given American Eagle Outfitters’ stronger consensus rating and higher probable upside, analysts clearly believe American Eagle Outfitters is more favorable than Zumiez.

Summary

American Eagle Outfitters beats Zumiez on 13 of the 15 factors compared between the two stocks.

About Zumiez

Zumiez Inc. operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. The company provides hardgoods, including skateboards, snowboards, bindings, components, and other equipment. It operates stores in the United States, Canada, Europe, and Australia under the names of Zumiez, Blue Tomato, and Fast Times. It operates zumiez.com, zumiez.ca, blue-tomato.com, and fasttimes.com.au e-commerce websites. Zumiez Inc. was founded in 1978 and is headquartered in Lynnwood, Washington.

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.