Analyzing ON (NYSE:ONON) and American Eagle Outfitters (NYSE:AEO)

ON (NYSE:ONON) and American Eagle Outfitters (NYSE:AEO) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ON	$2.63 billion	10.07	$275.23 million	$0.45	93.58
American Eagle Outfitters	$5.33 billion	0.54	$329.38 million	$1.04	16.27

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

Institutional and Insider Ownership

36.4% of ON shares are owned by institutional investors. Comparatively, 97.3% of American Eagle Outfitters shares are owned by institutional investors. 68.6% of ON shares are owned by company insiders. Comparatively, 8.7% of American Eagle Outfitters shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

ON has a beta of 2.19, meaning that its share price is 119% more volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for ON and American Eagle Outfitters, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ON	2	1	19	1	2.83
American Eagle Outfitters	3	10	1	0	1.86

ON presently has a consensus target price of $64.20, suggesting a potential upside of 52.45%. American Eagle Outfitters has a consensus target price of $14.72, suggesting a potential downside of 12.98%. Given ON’s stronger consensus rating and higher possible upside, research analysts clearly believe ON is more favorable than American Eagle Outfitters.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ON	4.45%	8.75%	5.10%
American Eagle Outfitters	3.74%	13.67%	5.80%

Summary

ON beats American Eagle Outfitters on 9 of the 15 factors compared between the two stocks.

About ON

On Holding AG engages in the development and distribution of sports products such as footwear, apparel, and accessories for high-performance running, outdoor, all-day activities, and tennis. It sells its products worldwide through independent retailers and global distributors, its own online presence, and its own stores. The company was founded by David Allemann, Olivier Bernhard, and Caspar Coppetti in January 2010 and is headquartered in Zurich, Switzerland.

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.