American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. Fundamental Analysis
American Eagle Outfitters, Inc. (AEO) shows weak financial fundamentals with a PE ratio of 18.97, profit margin of 3.90%, and ROE of 13.00%. The company generates $5.4B in annual revenue with weak year-over-year growth of 1.27%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 35.8/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze AEO's fundamental strength across five key dimensions:
Efficiency Score
WeakAEO struggles to generate sufficient returns from assets.
Valuation Score
ExcellentAEO trades at attractive valuation levels.
Growth Score
ModerateAEO shows steady but slowing expansion.
Financial Health Score
ModerateAEO shows balanced financial health with some risks.
Profitability Score
WeakAEO struggles to sustain strong margins.
Key Financial Metrics
Is AEO Expensive or Cheap?
P/E Ratio
AEO trades at 18.97 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, AEO's PEG of 1.66 indicates fair valuation.
Price to Book
The market values American Eagle Outfitters, Inc. at 2.43 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 4.09 times EBITDA. This is generally considered low.
How Well Does AEO Make Money?
Net Profit Margin
For every $100 in sales, American Eagle Outfitters, Inc. keeps $3.90 as profit after all expenses.
Operating Margin
Core operations generate 5.43 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $13.00 in profit for every $100 of shareholder equity.
ROA
American Eagle Outfitters, Inc. generates $4.97 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
American Eagle Outfitters, Inc. generates limited operating cash flow of $425.52M, signaling weaker underlying cash strength.
Free Cash Flow
American Eagle Outfitters, Inc. produces free cash flow of $290.52M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $1.71 in free cash annually.
FCF Yield
AEO converts 7.26% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
18.97
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.66
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.43
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.74
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.21
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.63
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.13
vs 25 benchmark
ROA
Return on assets percentage
0.05
vs 25 benchmark
ROCE
Return on capital employed
0.09
vs 25 benchmark
How AEO Stacks Against Its Sector Peers
| Metric | AEO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 18.97 | 24.85 | Better (Cheaper) |
| ROE | 13.00% | 1165.00% | Weak |
| Net Margin | 3.90% | 752.00% | Weak |
| Debt/Equity | 1.21 | 0.76 | Weak (High Leverage) |
| Current Ratio | 1.63 | 9.23 | Neutral |
| ROA | 4.97% | 1280.00% | Weak |
AEO outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews American Eagle Outfitters, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
8.73%
Industry Style: Cyclical, Growth, Discretionary
GrowingEPS CAGR
51.39%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
0.90%
Industry Style: Cyclical, Growth, Discretionary
Growing