Abercrombie & Fitch (NYSE:ANF) versus GAP (NYSE:GAP) Critical Review

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

Insider and Institutional Ownership

58.8% of GAP shares are owned by institutional investors. 2.6% of Abercrombie & Fitch shares are owned by insiders. Comparatively, 31.0% of GAP shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Abercrombie & Fitch	10.76%	47.35%	16.88%
GAP	5.05%	28.89%	6.92%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abercrombie & Fitch	$4.28 billion	1.79	$328.12 million	$9.44	15.86
GAP	$14.89 billion	0.55	$502.00 million	$2.02	10.79

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

Risk and Volatility

Abercrombie & Fitch has a beta of 1.49, indicating that its share price is 49% more volatile than the S&P 500. Comparatively, GAP has a beta of 2.35, indicating that its share price is 135% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Abercrombie & Fitch and GAP, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abercrombie & Fitch	0	3	4	0	2.57
GAP	0	3	0	0	2.00

Abercrombie & Fitch presently has a consensus price target of $176.71, suggesting a potential upside of 18.03%. GAP has a consensus price target of $27.00, suggesting a potential upside of 23.85%. Given GAP’s higher possible upside, analysts plainly believe GAP is more favorable than Abercrombie & Fitch.

Summary

Abercrombie & Fitch beats GAP on 8 of the 14 factors compared between the two stocks.

About Abercrombie & Fitch

Abercrombie & Fitch Co., through its subsidiaries, operates as an omnichannel retailer in the United States, Europe, the Middle East, Asia, the Asia-Pacific, Canada, and internationally. The company offers an assortment of apparel, personal care products, and accessories for men, women, and kids under the Abercrombie & Fitch, abercrombie kids, Hollister, and Gilly Hicks brands. It sells products through its stores, various wholesale. franchise, and licensing arrangements, as well as e-commerce platforms. The company was founded in 1892 and is headquartered in New Albany, Ohio.

About GAP

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.