Comparing Rent the Runway (NASDAQ:RENT) & American Eagle Outfitters (NYSE:AEO)

Rent the Runway (NASDAQ:RENT) and American Eagle Outfitters (NYSE:AEO) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rent the Runway	6.85%	N/A	-32.17%
American Eagle Outfitters	3.49%	16.76%	6.62%

Valuation & Earnings

This table compares Rent the Runway 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
Rent the Runway	$329.80 million	0.50	$22.60 million	$0.48	10.31
American Eagle Outfitters	$5.50 billion	0.60	$191.98 million	$1.12	17.72

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

Institutional and Insider Ownership

73.1% of Rent the Runway shares are held by institutional investors. Comparatively, 97.3% of American Eagle Outfitters shares are held by institutional investors. 8.2% of Rent the Runway shares are held by company insiders. Comparatively, 8.7% of American Eagle Outfitters shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Rent the Runway has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, American Eagle Outfitters has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Rent the Runway and American Eagle Outfitters, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rent the Runway	1	0	0	0	1.00
American Eagle Outfitters	2	13	1	0	1.94

American Eagle Outfitters has a consensus target price of $21.75, suggesting a potential upside of 9.62%. Given American Eagle Outfitters’ stronger consensus rating and higher possible upside, analysts plainly believe American Eagle Outfitters is more favorable than Rent the Runway.

Summary

American Eagle Outfitters beats Rent the Runway on 13 of the 14 factors compared between the two stocks.

About Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.

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.