Financial Review: Carvana (NYSE:CVNA) vs. American Eagle Outfitters (NYSE:AEO)

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for American Eagle Outfitters and Carvana, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Eagle Outfitters	1	10	2	1	2.21
Carvana	0	8	16	1	2.72

American Eagle Outfitters presently has a consensus price target of $19.55, suggesting a potential upside of 8.83%. Carvana has a consensus price target of $84.30, suggesting a potential upside of 33.65%. Given Carvana’s stronger consensus rating and higher probable upside, analysts plainly believe Carvana is more favorable than American Eagle Outfitters.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Eagle Outfitters	$5.50 billion	0.55	$191.98 million	$1.96	9.16
Carvana	$20.32 billion	3.42	$1.41 billion	$1.81	34.85

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

Institutional and Insider Ownership

97.3% of American Eagle Outfitters shares are owned by institutional investors. Comparatively, 56.7% of Carvana shares are owned by institutional investors. 8.9% of American Eagle Outfitters shares are owned by company insiders. Comparatively, 15.2% of Carvana shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

American Eagle Outfitters has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500. Comparatively, Carvana has a beta of 3.55, suggesting that its share price is 255% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Eagle Outfitters	5.91%	23.63%	9.59%
Carvana	6.26%	37.06%	12.21%

Summary

Carvana beats American Eagle Outfitters on 12 of the 14 factors compared between the two stocks.

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.

About Carvana

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices. The company also operates auction sites. The company was founded in 2012 and is based in Tempe, Arizona.