Despite its impressive fundamentals, NYSE:AEO remains undervalued.

Last update: Jul 23, 2024

Our stock screening tool has pinpointed AMERICAN EAGLE OUTFITTERS (NYSE:AEO) as an undervalued stock option. NYSE:AEO retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Unpacking NYSE:AEO's Valuation Rating

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:AEO has earned a 7 for valuation:

AEO's Price/Earnings ratio is a bit cheaper when compared to the industry. AEO is cheaper than 78.57% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 29.08. AEO is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 10.63 indicates a reasonable valuation of AEO.
Based on the Price/Forward Earnings ratio, AEO is valued a bit cheaper than the industry average as 77.78% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of AEO to the average of the S&P500 Index (20.74), we can say AEO is valued slightly cheaper.
AEO's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. AEO is cheaper than 83.33% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, AEO is valued cheaply inside the industry as 80.95% of the companies are valued more expensively.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.

Profitability Analysis for NYSE:AEO

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:AEO, the assigned 5 is noteworthy for profitability:

AEO has a Return On Assets of 6.17%. This is in the better half of the industry: AEO outperforms 69.84% of its industry peers.
Looking at the Return On Equity, with a value of 12.52%, AEO is in the better half of the industry, outperforming 68.25% of the companies in the same industry.
The Return On Invested Capital of AEO (10.08%) is better than 74.60% 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 71.43% of the companies in the same industry.
AEO has a better Operating Margin (7.48%) than 76.19% of its industry peers.

Health Examination for NYSE:AEO

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:AEO has achieved 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 Altman-Z score of 4.30. This is amongst the best in the industry. AEO outperforms 83.33% of its industry peers.
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 69.05% of the companies in the same industry.
The Quick ratio of AEO (0.81) is better than 66.67% of its industry peers.

Assessing Growth for NYSE:AEO

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:AEO has received a 5 out of 10:

AEO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 69.00%, which is quite impressive.
Based on estimates for the next years, AEO will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.98% on average per year.
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

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

For an up to date full fundamental analysis you can check the fundamental report of AEO

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.