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Are Investors Undervaluing American Eagle Outfitters (AEO) Right Now?

Zacks Equity Research
·2-min read

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

American Eagle Outfitters (AEO) is a stock many investors are watching right now. AEO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 10.92 right now. For comparison, its industry sports an average P/E of 14.57. Over the past 52 weeks, AEO's Forward P/E has been as high as 21.17 and as low as -315.80, with a median of 17.32.

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We should also highlight that AEO has a P/B ratio of 3.37. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.25. Over the past 12 months, AEO's P/B has been as high as 5.79 and as low as 2.21, with a median of 3.97.

These are just a handful of the figures considered in American Eagle Outfitters's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AEO is an impressive value stock right now.


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Zacks Investment Research