Financial Analysis: Tapestry (NYSE:TPR) versus Abercrombie & Fitch (NYSE:ANF)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Abercrombie & Fitch	9.34%	34.36%	13.50%
Tapestry	8.44%	229.70%	22.06%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abercrombie & Fitch	$5.27 billion	0.79	$506.92 million	$10.42	9.00
Tapestry	$7.01 billion	4.12	$183.20 million	$3.12	45.78

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

Analyst Ratings

This is a breakdown of current recommendations for Abercrombie & Fitch and Tapestry, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abercrombie & Fitch	1	4	8	0	2.54
Tapestry	0	5	15	1	2.81

Abercrombie & Fitch presently has a consensus price target of $111.91, suggesting a potential upside of 19.28%. Tapestry has a consensus price target of $170.06, suggesting a potential upside of 19.07%. Given Abercrombie & Fitch’s higher possible upside, research analysts plainly believe Abercrombie & Fitch is more favorable than Tapestry.

Institutional and Insider Ownership

90.8% of Tapestry shares are owned by institutional investors. 2.3% of Abercrombie & Fitch shares are owned by insiders. Comparatively, 1.3% of Tapestry shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Abercrombie & Fitch has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Tapestry has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500.

Summary

Tapestry beats Abercrombie & Fitch on 10 of the 15 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 Tapestry

Tapestry, Inc. provides luxury accessories and branded lifestyle products in the United States, Japan, Greater China, and internationally. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman. It offers women’s handbags; and women’s accessories, such as small leather goods which includes mini and micro handbags, money pieces, wristlets, pouches, and cosmetic cases, as well as novelty accessories including address books, time management and travel accessories, sketchbooks, and portfolios; and belts, key rings, and charms. The company also provides men products, which includes bag collections, such as business cases, computer bags, messenger-style bags, backpacks, and totes; small leather goods including wallets, card cases, travel organizers, and belts; and footwear, watches, fragrances, sunglasses, novelty accessories, and ready-to-wear items. In addition, it offers other products including women’s footwear and fragrances; eyewear and sunglasses; and jewelry, such as bracelets, necklaces, rings, and earrings, watches, and other women’s seasonal lifestyle apparel collections, including outerwear, ready-to-wear and cold weather accessories, such as gloves, scarves, and hats. Further, the company provides kids items, housewares, and home accessories, such as fashion bedding and tableware, stationery, and gifts. It offers its products through e-commerce sites and concession shop-in-shops, wholesale, and third-party distributors under the Coach, Kate Spade, and Stuart Weitzman brand names. The company was formerly known as Coach, Inc. and changed its name to Tapestry, Inc. in October 2017. Tapestry, Inc. was founded in 1941 and is headquartered in New York, New York.