GAP (NYSE:GAP) and Buckle (NYSE:BKE) Critical Analysis

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

Valuation and Earnings

This table compares GAP and Buckle”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$15.24 billion	0.61	$502.00 million	$2.16	11.50
Buckle	$1.22 billion	2.18	$219.92 million	$3.94	13.33

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for GAP and Buckle, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	1	4	6	0	2.45
Buckle	0	1	0	0	2.00

GAP currently has a consensus price target of $28.50, indicating a potential upside of 14.73%. Buckle has a consensus price target of $46.00, indicating a potential downside of 12.43%. Given GAP’s stronger consensus rating and higher possible upside, analysts clearly believe GAP is more favorable than Buckle.

Risk and Volatility

GAP has a beta of 2.37, suggesting that its share price is 137% more volatile than the S&P 500. Comparatively, Buckle has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Profitability

This table compares GAP and Buckle’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAP	5.40%	29.03%	7.26%
Buckle	16.21%	44.11%	21.32%

Insider & Institutional Ownership

58.8% of GAP shares are owned by institutional investors. Comparatively, 53.9% of Buckle shares are owned by institutional investors. 31.0% of GAP shares are owned by insiders. Comparatively, 39.8% of Buckle shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.4%. Buckle pays an annual dividend of $1.40 per share and has a dividend yield of 2.7%. GAP pays out 27.8% of its earnings in the form of a dividend. Buckle pays out 35.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

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.

About Buckle

The Buckle, Inc. operates as a retailer of casual apparel, footwear, and accessories for young men and women in the United States. It markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear, as well as private label merchandise primarily comprising BKE, Buckle Black, Salvage, Red by BKE, Daytrip, Gimmicks, Gilded Intent, FITZ + EDDI, Willow & Root, Outpost Makers, Departwest, Sterling & Stitch, Reclaim, BKE Vintage, Nova Industries, J.B. Holt, Modish Rebel, Maven Co-op, and Veece. The company provides services, such as hemming, gift-packaging, layaways, guest loyalty program, the Buckle private label credit card, and personalized stylist services, as well as special order system that allows stores to obtain requested merchandise from other company stores or its online order fulfillment center. The Buckle, Inc. also sells its products through its website, buckle.com. The company was formerly known as Mills Clothing, Inc. and changed its name to The Buckle, Inc. in April 1991.The Buckle, Inc. was incorporated in 1948 and is headquartered in Kearney, Nebraska.