American Eagle Outfitters (NYSE:AEO) versus Rent the Runway (NASDAQ:RENT) Head to Head Review

American Eagle Outfitters (NYSE:AEO) and Rent the Runway (NASDAQ:RENT) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Valuation & Earnings

This table compares American Eagle Outfitters and Rent the Runway”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	$1.12	16.25
Rent the Runway	$329.80 million	0.49	$22.60 million	$0.48	10.02

American Eagle Outfitters has higher revenue and earnings than Rent the Runway. Rent the Runway 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.

Insider and Institutional Ownership

97.3% of American Eagle Outfitters shares are held by institutional investors. Comparatively, 73.1% of Rent the Runway shares are held by institutional investors. 8.7% of American Eagle Outfitters shares are held by insiders. Comparatively, 8.2% of Rent the Runway shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for American Eagle Outfitters and Rent the Runway, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Eagle Outfitters	2	13	1	0	1.94
Rent the Runway	1	0	0	0	1.00

American Eagle Outfitters presently has a consensus target price of $21.75, suggesting a potential upside of 19.54%. Given American Eagle Outfitters’ stronger consensus rating and higher possible upside, analysts plainly believe American Eagle Outfitters is more favorable than Rent the Runway.

Profitability

This table compares American Eagle Outfitters and Rent the Runway’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%	6.62%
Rent the Runway	6.85%	N/A	-32.17%

Volatility and Risk

American Eagle Outfitters has a beta of 1.5, suggesting that its stock price is 50% more volatile than the S&P 500. Comparatively, Rent the Runway has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Summary

American Eagle Outfitters beats Rent the Runway on 13 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 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.