ARKO (NASDAQ:ARKO – Get Free Report) and American Eagle Outfitters (NYSE:AEO – Get Free Report) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.
Profitability
This table compares ARKO and American Eagle Outfitters’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ARKO | 0.19% | 4.02% | 0.41% |
| American Eagle Outfitters | 5.91% | 23.63% | 9.59% |
Earnings & Valuation
This table compares ARKO and American Eagle Outfitters”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| ARKO | $7.64 billion | 0.06 | $22.74 million | $0.07 | 60.07 |
| American Eagle Outfitters | $5.50 billion | 0.50 | $191.98 million | $1.96 | 8.29 |
American Eagle Outfitters has lower revenue, but higher earnings 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
ARKO pays an annual dividend of $0.12 per share and has a dividend yield of 2.9%. American Eagle Outfitters pays an annual dividend of $0.50 per share and has a dividend yield of 3.1%. 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 pays out 25.5% of its earnings in the form of a dividend. 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.
Volatility & Risk
ARKO has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.33, indicating that its share price is 33% more volatile than the S&P 500.
Institutional & Insider Ownership
78.3% of ARKO shares are held by institutional investors. Comparatively, 97.3% of American Eagle Outfitters shares are held by institutional investors. 21.9% of ARKO shares are held by insiders. Comparatively, 8.9% of American Eagle Outfitters shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Analyst Recommendations
This is a breakdown of current ratings and price targets for ARKO and American Eagle Outfitters, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ARKO | 1 | 1 | 1 | 0 | 2.00 |
| American Eagle Outfitters | 1 | 10 | 2 | 1 | 2.21 |
ARKO presently has a consensus target price of $14.50, suggesting a potential upside of 244.83%. American Eagle Outfitters has a consensus target price of $19.36, suggesting a potential upside of 19.23%. Given ARKO’s higher probable upside, equities analysts clearly believe ARKO is more favorable than American Eagle Outfitters.
Summary
American Eagle Outfitters beats ARKO on 14 of the 18 factors compared between the two stocks.
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.
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.
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