Xcel Brands (XELB) vs. Abercrombie & Fitch (ANF) Critical Analysis

Xcel Brands (NASDAQ: XELB) and Abercrombie & Fitch (NYSE:ANF) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Valuation and Earnings

This table compares Xcel Brands and Abercrombie & Fitch’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Xcel Brands $32.82 million 2.08 $3.75 million $0.14 30.71
Abercrombie & Fitch $3.30 billion 0.20 $181.49 million ($0.27) -36.33

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

Risk & Volatility

Xcel Brands has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, Abercrombie & Fitch has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Xcel Brands and Abercrombie & Fitch, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Xcel Brands 0 0 1 0 3.00
Abercrombie & Fitch 9 12 3 0 1.75

Xcel Brands presently has a consensus price target of $4.50, indicating a potential upside of 4.65%. Abercrombie & Fitch has a consensus price target of $13.95, indicating a potential upside of 42.20%. Given Abercrombie & Fitch’s higher probable upside, analysts plainly believe Abercrombie & Fitch is more favorable than Xcel Brands.

Institutional and Insider Ownership

22.6% of Xcel Brands shares are held by institutional investors. 62.2% of Xcel Brands shares are held by company insiders. Comparatively, 0.9% of Abercrombie & Fitch 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.

Dividends

Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 8.2%. Xcel Brands does not pay a dividend. Abercrombie & Fitch pays out -296.3% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Xcel Brands 8.38% 1.00% 0.70%
Abercrombie & Fitch -0.55% -1.26% -0.67%

Summary

Xcel Brands beats Abercrombie & Fitch on 8 of the 15 factors compared between the two stocks.

Xcel Brands Company Profile

Xcel Brands, Inc. is a brand development and media company. The Company is engaged in the design, production, licensing, marketing, and direct to consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of consumer lifestyle brands. The Company’s brand portfolio consists of the Isaac Mizrahi, Judith Ripka, H Halston, C Wonder and Highline Collective brands. The Company also manages and designs the Liz Claiborne New York brand (LCNY Brand). Isaac Mizrahi has over 150 different product categories, including sportswear, footwear, handbags, watches, eyewear, fragrance, tech accessories, intimates, bridal gowns and accessories, pet products, home and other merchandise. The Company’s Judith Ripka is a luxury jewelry brand. Wonder brand offers women’s clothing, footwear, jewelry and accessories; housewares, and home decor and gifts. The Liz Claiborne New York includes women’s apparel, footwear, outerwear and accessories.

Abercrombie & Fitch Company Profile

Abercrombie & Fitch Co. is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company operates through two segments: Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands, and Hollister, which includes the Company’s Hollister and Gilly Hicks brands. The Company offers an array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear, and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. As of January 28, 2017, the Company operated 709 stores in the United States and 189 stores outside of the United States.

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