For those who appreciate value investing, NYSE:AEO is a compelling option with its solid fundamentals.

Last update: Jun 10, 2024

Take a closer look at AMERICAN EAGLE OUTFITTERS (NYSE:AEO), a remarkable value stock uncovered by our stock screener. NYSE:AEO excels in fundamentals and maintains a very reasonable valuation. Let's break it down further.

Valuation Assessment of 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:

79.20% of the companies in the same industry are more expensive than AEO, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 28.12. AEO is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 10.96, which indicates a very decent valuation of AEO.
AEO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. AEO is cheaper than 77.60% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 19.99, AEO is valued a bit cheaper.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEO indicates a rather cheap valuation: AEO is cheaper than 81.60% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, AEO is valued cheaper than 81.60% of the companies 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.
AEO's earnings are expected to grow with 13.28% in the coming years. This may justify a more expensive valuation.

Understanding NYSE:AEO's Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:AEO was assigned a score of 5 for profitability:

With a decent Return On Assets value of 6.17%, AEO is doing good in the industry, outperforming 69.60% of the companies in the same industry.
AEO has a Return On Equity of 12.52%. This is in the better half of the industry: AEO outperforms 67.20% of its industry peers.
AEO has a Return On Invested Capital of 10.08%. This is in the better half of the industry: AEO outperforms 73.60% of its industry peers.
Looking at the Profit Margin, with a value of 4.12%, AEO is in the better half of the industry, outperforming 70.40% of the companies in the same industry.
With a decent Operating Margin value of 7.48%, AEO is doing good in the industry, outperforming 75.20% of the companies in the same industry.

Understanding NYSE:AEO's Health Score

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:AEO, the assigned 7 reflects its health status:

AEO has an Altman-Z score of 4.34. This indicates that AEO is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.34, AEO belongs to the best of the industry, outperforming 82.40% of the companies in the same industry.
AEO has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
With a decent Current ratio value of 1.70, AEO is doing good in the industry, outperforming 66.40% of the companies in the same industry.
AEO has a Quick ratio of 0.81. This is in the better half of the industry: AEO outperforms 65.60% of its industry peers.

How do we evaluate the Growth for NYSE:AEO?

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:AEO was assigned a score of 5 for growth:

The Earnings Per Share has grown by an impressive 69.00% over the past year.
The Earnings Per Share is expected to grow by 13.28% on average over the next years. This is quite good.
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.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of AEO contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.