NYSE:AEO stands out as a stock that provides good value for the fundamentals it showcases.

AMERICAN EAGLE OUTFITTERS (NYSE:AEO) was identified as a decent value stock by our stock screener. NYSE:AEO scores well on profitability, solvency and liquidity. At the same time it seems to be priced very reasonably. We'll explore this a bit deeper below.

Evaluating Valuation: NYSE:AEO

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:AEO has received a 7 out of 10:

• Compared to the rest of the industry, the Price/Earnings ratio of AEO indicates a somewhat cheap valuation: AEO is cheaper than 67.97% of the companies listed in the same industry.
• When comparing the Price/Earnings ratio of AEO to the average of the S&P500 Index (25.97), we can say AEO is valued slightly cheaper.
• 71.88% of the companies in the same industry are more expensive than AEO, based on the Price/Forward Earnings ratio.
• The average S&P500 Price/Forward Earnings ratio is at 22.31. AEO is valued slightly cheaper when compared to this.
• 69.53% of the companies in the same industry are more expensive than AEO, based on the Enterprise Value to EBITDA ratio.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of AEO indicates a rather cheap valuation: AEO is cheaper than 83.59% of the companies listed in the same industry.
• AEO's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The decent profitability rating of AEO may justify a higher PE ratio.
• AEO's earnings are expected to grow with 21.45% in the coming years. This may justify a more expensive valuation.

Profitability Examination for NYSE:AEO

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:AEO has earned a 6 out of 10:

• AEO has a Return On Assets of 6.20%. This is in the better half of the industry: AEO outperforms 67.97% of its industry peers.
• Looking at the Return On Equity, with a value of 12.56%, AEO is in the better half of the industry, outperforming 65.63% of the companies in the same industry.
• AEO has a Return On Invested Capital of 8.92%. This is in the better half of the industry: AEO outperforms 67.19% of its industry peers.
• The 3 year average ROIC (7.49%) for AEO is below the current ROIC(8.92%), indicating increased profibility in the last year.
• AEO's Profit Margin of 4.30% is fine compared to the rest of the industry. AEO outperforms 71.09% of its industry peers.
• The Operating Margin of AEO (6.51%) is better than 69.53% of its industry peers.

Assessing Health for NYSE:AEO

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:AEO scores a 7 out of 10:

• AEO has an Altman-Z score of 4.30. This indicates that AEO is financially healthy and has little risk of bankruptcy at the moment.
• AEO has a better Altman-Z score (4.30) than 82.81% of its industry peers.
• There is no outstanding debt for AEO. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• The Current ratio of AEO (1.63) is better than 64.84% of its industry peers.

A Closer Look at Growth for NYSE:AEO

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:AEO has achieved a 5 out of 10:

• AEO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 31.96%, which is quite impressive.
• The Earnings Per Share is expected to grow by 21.45% on average over the next years. This is a very strong growth
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Check the latest full fundamental report of AEO for a complete fundamental analysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.