Analyzing Rent the Runway (NASDAQ:RENT) and Abercrombie & Fitch (NYSE:ANF)

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

Volatility and Risk

Abercrombie & Fitch has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500. Comparatively, Rent the Runway has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Insider & Institutional Ownership

73.1% of Rent the Runway shares are held by institutional investors. 2.3% of Abercrombie & Fitch shares are held by insiders. Comparatively, 8.2% of Rent the Runway shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Abercrombie & Fitch and Rent the Runway”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abercrombie & Fitch	$5.10 billion	0.66	$566.22 million	$10.57	6.73
Rent the Runway	$306.20 million	0.06	-$69.90 million	($21.51)	-0.21

Abercrombie & Fitch has higher revenue and earnings than Rent the Runway. Rent the Runway 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 Ratings

This is a breakdown of current recommendations and price targets for Abercrombie & Fitch and Rent the Runway, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abercrombie & Fitch	1	5	5	0	2.36
Rent the Runway	1	2	1	0	2.00

Abercrombie & Fitch presently has a consensus target price of $107.00, indicating a potential upside of 50.37%. Rent the Runway has a consensus target price of $40.00, indicating a potential upside of 776.23%. Given Rent the Runway’s higher possible upside, analysts clearly believe Rent the Runway is more favorable than Abercrombie & Fitch.

Profitability

This table compares Abercrombie & Fitch and Rent the Runway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Abercrombie & Fitch	10.61%	40.02%	15.80%
Rent the Runway	-28.00%	N/A	-35.49%

Summary

Abercrombie & Fitch beats Rent the Runway on 11 of the 14 factors compared between the two stocks.

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.

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.