Analyzing Hennes & Mauritz (OTCMKTS:HNNMY) & American Eagle Outfitters (NYSE:AEO)

Hennes & Mauritz (OTCMKTS:HNNMY) and American Eagle Outfitters (NYSE:AEO) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Earnings and Valuation

This table compares Hennes & Mauritz and American Eagle Outfitters”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hennes & Mauritz	$23.01 billion	1.06	$1.23 billion	$0.17	20.41
American Eagle Outfitters	$5.50 billion	0.66	$191.98 million	$1.96	11.05

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

Institutional and Insider Ownership

0.0% of Hennes & Mauritz shares are held by institutional investors. Comparatively, 97.3% of American Eagle Outfitters shares are held by institutional investors. 8.9% of American Eagle Outfitters shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Hennes & Mauritz and American Eagle Outfitters, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hennes & Mauritz	3	4	0	0	1.57
American Eagle Outfitters	1	12	2	0	2.07

American Eagle Outfitters has a consensus target price of $19.55, suggesting a potential downside of 9.72%. Given American Eagle Outfitters’ stronger consensus rating and higher probable upside, analysts clearly believe American Eagle Outfitters is more favorable than Hennes & Mauritz.

Profitability

This table compares Hennes & Mauritz and American Eagle Outfitters’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hennes & Mauritz	5.94%	33.70%	7.80%
American Eagle Outfitters	5.91%	23.63%	9.59%

Risk & Volatility

Hennes & Mauritz has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500.

Dividends

Hennes & Mauritz pays an annual dividend of $0.07 per share and has a dividend yield of 2.0%. American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 2.3%. Hennes & Mauritz pays out 41.2% of its earnings in the form of a dividend. American Eagle Outfitters pays out 25.5% 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 raised its dividend for 2 consecutive years. American Eagle Outfitters is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

American Eagle Outfitters beats Hennes & Mauritz on 11 of the 17 factors compared between the two stocks.

About Hennes & Mauritz

Hennes & Mauritz AB, commonly known as H&M Group, is a Swedish fashion and retail company. Erling Persson founded the business in 1947 in Västerås, Sweden, initially selling women’s clothing under the name Hennes. In 1968, the company acquired the hunting and fishing retailer Mauritz Widforss, adding menswear and adopting the Hennes & Mauritz name. The company sells clothing, footwear, accessories, beauty products and home furnishings through its retail stores and online platforms. Its brand portfolio includes H&M, COS, Weekday, & Other Stories and ARKET, serving customers across markets in Europe, North America, Asia and other regions.

About American Eagle Outfitters

American Eagle Outfitters, Inc. is a specialty retailer of apparel, accessories and personal-care products. Its American Eagle brand offers casual clothing, including denim, tops and accessories, while Aerie sells intimates, loungewear, swimwear and activewear. The company also operates OFFLINE by Aerie, a brand focused on activewear and apparel. The company sells through its retail stores and online channels, serving customers primarily in the United States and Canada, with additional international reach through stores and other distribution arrangements.