American Eagle Outfitters (AEO) and Stein Mart (SMRT) Financial Contrast

American Eagle Outfitters (NYSE: AEO) and Stein Mart (NASDAQ:SMRT) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
American Eagle Outfitters 4.85% 18.25% 12.17%
Stein Mart -1.89% -34.59% -4.43%

Earnings & Valuation

This table compares American Eagle Outfitters and Stein Mart’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Eagle Outfitters $3.64 billion 0.62 $479.75 million $0.97 13.21
Stein Mart $1.33 billion 0.04 $326,000.00 ($0.55) -2.18

American Eagle Outfitters has higher revenue and earnings than Stein Mart. Stein Mart 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 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Stein Mart has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for American Eagle Outfitters and Stein Mart, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Eagle Outfitters 3 8 9 0 2.30
Stein Mart 0 0 0 0 N/A

American Eagle Outfitters presently has a consensus price target of $14.76, suggesting a potential upside of 15.25%. Given American Eagle Outfitters’ higher possible upside, analysts plainly believe American Eagle Outfitters is more favorable than Stein Mart.

Dividends

American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 3.9%. Stein Mart pays an annual dividend of $0.15 per share and has a dividend yield of 12.5%. American Eagle Outfitters pays out 51.5% of its earnings in the form of a dividend. Stein Mart pays out -27.3% 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. Stein Mart is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

83.8% of American Eagle Outfitters shares are owned by institutional investors. Comparatively, 33.0% of Stein Mart shares are owned by institutional investors. 5.8% of American Eagle Outfitters shares are owned by company insiders. Comparatively, 34.7% of Stein Mart shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

American Eagle Outfitters beats Stein Mart on 11 of the 14 factors compared between the two stocks.

About American Eagle Outfitters

American Eagle Outfitters, Inc. (AEO Inc.) is a multi-brand specialty retailer. The Company offers a range of apparel and accessories for men and women under the American Eagle Outfitters Brand (AEO Brand), and intimates, apparel and personal care products for women under the Aerie brand. AEO Inc. operates stores in the United States, Canada, Mexico, Hong Kong, China and the United Kingdom. As of January 28, 2017, the Company operated over 1,000 retail stores and online at ae.com and aerie.com in the United States and internationally. Its company-owned retail stores are located in shopping malls, lifestyle centers and street locations in the United States, Canada, Mexico, China, Hong Kong and the United Kingdom. Its other brands include Tailgate and Todd Snyder New York. Tailgate is an apparel brand with a college town store concept. Todd Snyder New York is a menswear brand. As of January 28, 2017, the AEO brand operated 943 stores and online at www.ae.com.

About Stein Mart

Stein Mart, Inc. is a national retailer offering the fashion merchandise, service and presentation of a department or specialty store. The Company offers apparel for women and men, as well as accessories, shoes and home fashions. The Company’s target customers are women over 45 years old. The Company operates approximately 280 stores in over 30 states and an Internet store. Its stores are located in the Northeast, Midwest, Southeast, Texas and the Southwest. It is concentrated in the Southeast and Texas where over 180 of its stores are located. The Company’s stores offer a range of services, such as merchandise locator service, a Preferred Customer program, co-branded and private label credit card programs, and electronic gift cards. The Company’s merchants purchase products from approximately 1,200 vendors. It leases all of its store locations, generally for approximately 10 years with options to extend the lease term for over two or five year periods.

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