Analyzing Immersion (NASDAQ:IMMR) and Abercrombie & Fitch (NYSE:ANF)

Abercrombie & Fitch (NYSE:ANF) and Immersion (NASDAQ:IMMR) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Institutional & Insider Ownership

60.6% of Immersion shares are held by institutional investors. 2.3% of Abercrombie & Fitch shares are held by company insiders. Comparatively, 10.6% of Immersion shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Abercrombie & Fitch and Immersion’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Abercrombie & Fitch	10.03%	33.52%	13.05%
Immersion	0.60%	1.83%	0.82%

Volatility and Risk

Abercrombie & Fitch has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Immersion has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Dividends

Abercrombie & Fitch pays an annual dividend of $0.80 per share and has a dividend yield of 0.5%. Immersion pays an annual dividend of $0.30 per share and has a dividend yield of 4.3%. Abercrombie & Fitch pays out 6.8% of its earnings in the form of a dividend. Immersion pays out 88.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Abercrombie & Fitch and Immersion”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abercrombie & Fitch	$5.34 billion	1.22	$506.92 million	$11.68	13.13
Immersion	$1.73 billion	0.13	$4.52 million	$0.34	20.47

Abercrombie & Fitch has higher revenue and earnings than Immersion. Abercrombie & Fitch is trading at a lower price-to-earnings ratio than Immersion, 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 Abercrombie & Fitch and Immersion, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abercrombie & Fitch	0	5	8	2	2.80
Immersion	0	2	1	0	2.33

Abercrombie & Fitch presently has a consensus price target of $155.38, indicating a potential upside of 1.32%. Immersion has a consensus price target of $13.50, indicating a potential upside of 93.97%. Given Immersion’s higher possible upside, analysts plainly believe Immersion is more favorable than Abercrombie & Fitch.

Summary

Abercrombie & Fitch beats Immersion on 12 of the 17 factors compared between the two stocks.

About Abercrombie & Fitch

Abercrombie & Fitch Co. engages in the retail of apparel, personal care products, and accessories. The firm operates through following geographical segments: Americas, EMEA and APAC. The Americas segment includes operations in North America and South America. The EMEA segment includes operations in Europe, the Middle East and Africa. The APAC segment includes operations in the Asia-Pacific region, including Asia and Oceania. The company was founded by David Abercrombie in 1892 and is headquartered in New Albany, OH.

About Immersion

Immersion Corporation, together with its subsidiaries, engages in the creation, design, development, and licensing of haptic technologies that allow people to use their sense of touch to engage with and experience various digital products in North America, Europe, and Asia. The company provides technology, patent, and combined licenses. It serves markets, including mobility, gaming, automotive, virtual and augmented reality, and wearables, as well as residential, commercial, and industrial Internet of Things. The company was incorporated in 1993 and is headquartered in Aventura, Florida.