Critical Contrast: Abercrombie & Fitch (NYSE:ANF) versus Zumiez (NASDAQ:ZUMZ)

Abercrombie & Fitch (NYSE:ANF) and Zumiez (NASDAQ:ZUMZ) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, profitability, risk, institutional ownership and earnings.

Risk & Volatility

Abercrombie & Fitch has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Zumiez has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Abercrombie & Fitch	9.63%	36.36%	14.26%
Zumiez	1.44%	3.91%	1.90%

Insider and Institutional Ownership

95.5% of Zumiez shares are held by institutional investors. 2.3% of Abercrombie & Fitch shares are held by insiders. Comparatively, 24.3% of Zumiez shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Abercrombie & Fitch and Zumiez, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abercrombie & Fitch	0	5	8	0	2.62
Zumiez	0	3	0	0	2.00

Abercrombie & Fitch currently has a consensus target price of $117.18, suggesting a potential upside of 62.48%. Zumiez has a consensus target price of $18.00, suggesting a potential downside of 21.60%. Given Abercrombie & Fitch’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Abercrombie & Fitch is more favorable than Zumiez.

Earnings and Valuation

This table compares Abercrombie & Fitch and Zumiez”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abercrombie & Fitch	$5.27 billion	0.61	$506.92 million	$10.54	6.84
Zumiez	$929.06 million	0.43	$13.38 million	$0.86	26.70

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

Summary

Abercrombie & Fitch beats Zumiez on 10 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 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.