Comparing Buckle (NYSE:BKE) & GAP (NYSE:GAP)

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

Risk and Volatility

GAP has a beta of 2.37, indicating that its stock price is 137% more volatile than the S&P 500. Comparatively, Buckle has a beta of 1.14, indicating that its stock 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 and Institutional Ownership

58.8% of GAP shares are held by institutional investors. Comparatively, 53.9% of Buckle shares are held by institutional investors. 31.0% of GAP shares are held by company insiders. Comparatively, 39.8% of Buckle 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.

Earnings and Valuation

This table compares GAP and Buckle”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$14.89 billion	0.62	$502.00 million	$2.16	11.25
Buckle	$1.22 billion	2.17	$219.92 million	$3.94	13.24

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 Ratings

This is a breakdown of current ratings and price targets for GAP and Buckle, as reported 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 presently has a consensus target price of $28.50, indicating a potential upside of 17.33%. Buckle has a consensus target price of $46.00, indicating a potential downside of 11.84%. Given GAP’s stronger consensus rating and higher probable upside, analysts plainly believe GAP is more favorable than Buckle.

Dividends

GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.5%. 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.