The Buckle, Inc. (BKE), Abercrombie & Fitch Co. (ANF): Which Apparel Retailer Is Worth Buying Now?

What makes me interested in American Eagle Outfitters is its high comparable sales growth of 9%. In 2012, the retailer produced $475 million in operating cash flow and $380 million in free cash flow. Moreover, the retailer has been expanding its business overseas. In March, American Eagle Outfitters announced that it opened its first store in Manila. After four years of international expansion, it currently has 45 franchised stores in 11 countries including Russia, China, Hong Kong, Mexico, and Israel.

Of the trio, The Buckle, Inc. (NYSE:BKE) is the most profitable with the highest return on invested capital of more than 50.3% while the return on invested capital of American Eagle Outfitters and Abercrombie & Fitch Co. (NYSE:ANF) are much lower, at only 17.60% and 12.11%, respectively. The extremely high return on invested capital of The Buckle was due to the high net margin of 14.6%. However, American Eagle Outfitters seems to have the most efficient operations among the three with the lowest cash conversion cycle (CCC) of only 34 days, while the CCCs of The Buckle and Abercrombie & Fitch are 44 days and 77 days, respectively.

My Foolish take

Income investors might like American Eagle Outfitters the most with its highest dividend yield of 2.20%. The Buckle and Abercrombie & Fitch pay dividends with a similar yield of 1.50%. Personally, I like The Buckle the most with its extremely high return on invested capital. Moreover, investors might also consider American Eagle Outfitters with its lowest valuation and highest dividend yield.

The article Which Apparel Retailer Is Worth Buying Now? originally appeared on Fool.com and is written by Anh HOANG.

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