Comparing Abercrombie & Fitch (ANF) and Foot Locker (FL)

Foot Locker (NYSE: FL) and Abercrombie & Fitch (NYSE:ANF) are both cyclical consumer goods & services companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.

Risk & Volatility

Foot Locker has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Valuation and Earnings

This table compares Foot Locker and Abercrombie & Fitch’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Foot Locker $7.77 billion 0.72 $664.00 million $3.97 11.66
Abercrombie & Fitch $3.33 billion 0.37 $3.95 million ($0.29) -63.03

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

Dividends

Foot Locker pays an annual dividend of $1.24 per share and has a dividend yield of 2.7%. Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 4.4%. Foot Locker pays out 31.2% of its earnings in the form of a dividend. Abercrombie & Fitch pays out -275.9% 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. Foot Locker has raised its dividend for 7 consecutive years. Abercrombie & Fitch is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

89.9% of Foot Locker shares are owned by institutional investors. Comparatively, 99.3% of Abercrombie & Fitch shares are owned by institutional investors. 1.7% of Foot Locker shares are owned by company insiders. Comparatively, 0.6% of Abercrombie & Fitch shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Foot Locker 6.79% 19.96% 14.29%
Abercrombie & Fitch -0.55% 0.80% 0.43%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Foot Locker and Abercrombie & Fitch, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Foot Locker 1 12 11 0 2.42
Abercrombie & Fitch 6 13 3 0 1.86

Foot Locker currently has a consensus target price of $53.86, indicating a potential upside of 16.37%. Abercrombie & Fitch has a consensus target price of $12.94, indicating a potential downside of 29.19%. Given Foot Locker’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Foot Locker is more favorable than Abercrombie & Fitch.

Summary

Foot Locker beats Abercrombie & Fitch on 13 of the 17 factors compared between the two stocks.

Foot Locker Company Profile

Foot Locker, Inc. is a retailer of shoes and apparel. The Company operates through two segments: Athletic Stores and Direct-to-Customers. The Company is an athletic footwear and apparel retailer, which include businesses, such as include Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep and SIX:02. The Direct-to-Customers segment is multi-branded and sells directly to customers through Internet and mobile sites and catalogs. The Direct-to-Customers segment operates the Websites for eastbay.com, final-score.com, eastbayteamsales.com and sp24.com. Additionally, this segment includes the Websites, both desktop and mobile, aligned with the brand names of its store banners (footlocker.com, ladyfootlocker.com, six02.com kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, runnerspoint.com and sidestep-shoes.com).

Abercrombie & Fitch Company Profile

Abercrombie & Fitch Co. is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company operates through two segments: Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands, and Hollister, which includes the Company’s Hollister and Gilly Hicks brands. The Company offers an array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear, and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. As of January 28, 2017, the Company operated 709 stores in the United States and 189 stores outside of the United States.

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