American Eagle Outfitters (NYSE:AEO – Get Free Report) and ARKO (NASDAQ:ARKO – Get Free Report) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.
Analyst Recommendations
This is a summary of recent recommendations and price targets for American Eagle Outfitters and ARKO, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Eagle Outfitters | 1 | 10 | 2 | 1 | 2.21 |
| ARKO | 1 | 1 | 1 | 0 | 2.00 |
American Eagle Outfitters presently has a consensus price target of $19.36, indicating a potential upside of 19.23%. ARKO has a consensus price target of $14.50, indicating a potential upside of 244.83%. Given ARKO’s higher possible upside, analysts plainly believe ARKO is more favorable than American Eagle Outfitters.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Eagle Outfitters | $5.50 billion | 0.50 | $191.98 million | $1.96 | 8.29 |
| ARKO | $7.64 billion | 0.06 | $22.74 million | $0.07 | 60.07 |
American Eagle Outfitters has higher earnings, but lower revenue than ARKO. American Eagle Outfitters is trading at a lower price-to-earnings ratio than ARKO, indicating that it is currently the more affordable of the two stocks.
Dividends
American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 3.1%. ARKO pays an annual dividend of $0.12 per share and has a dividend yield of 2.9%. American Eagle Outfitters pays out 25.5% of its earnings in the form of a dividend. ARKO pays out 171.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Eagle Outfitters has increased 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.
Risk & Volatility
American Eagle Outfitters has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, ARKO has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.
Profitability
This table compares American Eagle Outfitters and ARKO’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% |
| ARKO | 0.19% | 4.02% | 0.41% |
Institutional & Insider Ownership
97.3% of American Eagle Outfitters shares are held by institutional investors. Comparatively, 78.3% of ARKO shares are held by institutional investors. 8.9% of American Eagle Outfitters shares are held by company insiders. Comparatively, 21.9% of ARKO shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Summary
American Eagle Outfitters beats ARKO on 14 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 ARKO
Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.
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