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

Our stock screener has singled out AMERICAN EAGLE OUTFITTERS (NYSE:AEO) as a stellar value proposition. NYSE:AEO not only scores well in profitability, solvency, and liquidity but also maintains a very reasonable price point. We'll explore this further.

Evaluating Valuation: NYSE:AEO

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:AEO has achieved a 7 out of 10:

• 78.69% of the companies in the same industry are more expensive than AEO, based on the Price/Earnings ratio.
• Compared to an average S&P500 Price/Earnings ratio of 29.72, AEO is valued rather cheaply.
• AEO is valuated reasonably with a Price/Forward Earnings ratio of 10.91.
• 77.87% of the companies in the same industry are more expensive than AEO, based on the Price/Forward Earnings ratio.
• AEO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.97.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEO indicates a rather cheap valuation: AEO is cheaper than 82.79% of the companies listed in the same industry.
• Based on the Price/Free Cash Flow ratio, AEO is valued cheaper than 80.33% 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.
• A more expensive valuation may be justified as AEO's earnings are expected to grow with 12.21% in the coming years.

Looking at the Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:AEO has achieved a 5:

• Looking at the Return On Assets, with a value of 6.17%, AEO is in the better half of the industry, outperforming 71.31% of the companies in the same industry.
• AEO's Return On Equity of 12.52% is fine compared to the rest of the industry. AEO outperforms 68.85% of its industry peers.
• With a decent Return On Invested Capital value of 10.08%, AEO is doing good in the industry, outperforming 75.41% of the companies in the same industry.
• AEO's Profit Margin of 4.12% is fine compared to the rest of the industry. AEO outperforms 72.95% of its industry peers.
• AEO has a Operating Margin of 7.48%. This is in the better half of the industry: AEO outperforms 77.05% of its industry peers.

Health Insights: NYSE:AEO

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:AEO has earned a 7 out of 10:

• An Altman-Z score of 4.33 indicates that AEO is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 4.33, AEO belongs to the top of the industry, outperforming 82.79% 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.
• AEO has a better Current ratio (1.70) than 71.31% of its industry peers.
• AEO's Quick ratio of 0.81 is fine compared to the rest of the industry. AEO outperforms 67.21% of its industry peers.

Understanding NYSE:AEO's Growth Score

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.
• AEO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.21% yearly.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

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

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

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.