American Eagle Outfitters (NYSE:AEO) vs. Levi Strauss & Co. (NYSE:LEVI) Head to Head Contrast

American Eagle Outfitters (NYSE:AEO) and Levi Strauss & Co. (NYSE:LEVI) are both mid-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Volatility and Risk

American Eagle Outfitters has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500. Comparatively, Levi Strauss & Co. has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.

Dividends

American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 2.7%. Levi Strauss & Co. pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. American Eagle Outfitters pays out 44.6% of its earnings in the form of a dividend. Levi Strauss & Co. pays out 38.4% 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. American Eagle Outfitters has increased its dividend for 2 consecutive years and Levi Strauss & Co. has increased its dividend for 4 consecutive years. Levi Strauss & Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

97.3% of American Eagle Outfitters shares are held by institutional investors. Comparatively, 69.1% of Levi Strauss & Co. shares are held by institutional investors. 8.7% of American Eagle Outfitters shares are held by company insiders. Comparatively, 1.3% of Levi Strauss & Co. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares American Eagle Outfitters and Levi Strauss & Co.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Eagle Outfitters	3.49%	16.76%	6.61%
Levi Strauss & Co.	9.20%	25.08%	8.19%

Analyst Ratings

This is a summary of current ratings and target prices for American Eagle Outfitters and Levi Strauss & Co., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Eagle Outfitters	2	11	1	1	2.07
Levi Strauss & Co.	0	3	12	0	2.80

American Eagle Outfitters currently has a consensus price target of $21.75, indicating a potential upside of 17.61%. Levi Strauss & Co. has a consensus price target of $26.69, indicating a potential upside of 41.30%. Given Levi Strauss & Co.’s stronger consensus rating and higher possible upside, analysts clearly believe Levi Strauss & Co. is more favorable than American Eagle Outfitters.

Valuation and Earnings

This table compares American Eagle Outfitters and Levi Strauss & Co.”s 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	0.57	$191.98 million	$1.12	16.51
Levi Strauss & Co.	$6.28 billion	1.17	$578.10 million	$1.46	12.94

Levi Strauss & Co. has higher revenue and earnings than American Eagle Outfitters. Levi Strauss & Co. 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.

Summary

Levi Strauss & Co. beats American Eagle Outfitters on 13 of the 18 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 Levi Strauss & Co.

Levi Strauss & Co. engages in the design, marketing, and sale of apparel products. The company offers jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear, and related accessories. It operates through the following geographical segments: Americas, Europe, and Asia. The company was founded by Levi Strauss in 1853 and is headquartered in San Francisco, CA.