AMERICAN EAGLE OUTFITTERS (AEO) Stock Fundamental Analysis
NYSE:AEO - New York Stock Exchange, Inc. - US02553E1064 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to AEO. AEO was compared to 120 industry peers in the Specialty Retail industry. AEO scores excellent points on both the profitability and health parts. This is a solid base for a good stock. AEO is valued quite cheap, but it does not seem to be growing. These ratings would make AEO suitable for value investing!
1. Profitability
1.1 Basic Checks
In the past year AEO was profitable.
AEO had a positive operating cash flow in the past year.
AEO had positive earnings in 4 of the past 5 years.
Each year in the past 5 years AEO had a positive operating cash flow.
1.2 Ratios
The Return On Assets of AEO (8.60%) is better than 79.17% of its industry peers.
Looking at the Return On Equity, with a value of 18.64%, AEO is in the better half of the industry, outperforming 76.67% of the companies in the same industry.
AEO has a Return On Invested Capital of 10.97%. This is in the better half of the industry: AEO outperforms 75.83% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AEO is below the industry average of 13.32%.
The 3 year average ROIC (9.43%) for AEO is below the current ROIC(10.97%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.6% | ||
| ROE | 18.64% | ||
| ROIC | 10.97% |
ROA(3y)5.68%
ROA(5y)4.4%
ROE(3y)12.09%
ROE(5y)9.29%
ROIC(3y)9.43%
ROIC(5y)8.68%
1.3 Margins
AEO has a better Profit Margin (6.18%) than 80.00% of its industry peers.
AEO's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 8.35%, AEO is in the better half of the industry, outperforming 78.33% of the companies in the same industry.
In the last couple of years the Operating Margin of AEO has grown nicely.
AEO has a Gross Margin (39.20%) which is in line with its industry peers.
In the last couple of years the Gross Margin of AEO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.35% | ||
| PM (TTM) | 6.18% | ||
| GM | 39.2% |
OM growth 3Y-11.47%
OM growth 5Y2.77%
PM growth 3Y-9.62%
PM growth 5Y6.84%
GM growth 3Y-0.46%
GM growth 5Y2.1%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), AEO is creating some value.
The number of shares outstanding for AEO has been reduced compared to 1 year ago.
The number of shares outstanding for AEO has been increased compared to 5 years ago.
There is no outstanding debt for AEO. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
An Altman-Z score of 3.33 indicates that AEO is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 3.33, AEO is doing good in the industry, outperforming 75.83% 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 3.33 |
ROIC/WACC1.15
WACC9.53%
2.3 Liquidity
AEO has a Current Ratio of 1.53. This is a normal value and indicates that AEO is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.53, AEO is in the better half of the industry, outperforming 63.33% of the companies in the same industry.
AEO has a Quick Ratio of 1.53. This is a bad value and indicates that AEO is not financially healthy enough and could expect problems in meeting its short term obligations.
AEO has a better Quick ratio (0.81) than 69.17% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.53 | ||
| Quick Ratio | 0.81 |
3. Growth
3.1 Past
AEO shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -33.73%.
Measured over the past 5 years, AEO shows a small growth in Earnings Per Share. The EPS has been growing by 3.41% on average per year.
The Revenue has decreased by -0.95% in the past year.
Measured over the past years, AEO shows a small growth in Revenue. The Revenue has been growing by 4.34% on average per year.
EPS 1Y (TTM)-33.73%
EPS 3Y-7.2%
EPS 5Y3.41%
EPS Q2Q%-185.29%
Revenue 1Y (TTM)-0.95%
Revenue growth 3Y2.07%
Revenue growth 5Y4.34%
Sales Q2Q%-4.74%
3.2 Future
The Earnings Per Share is expected to decrease by -7.38% on average over the next years.
AEO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 0.38% yearly.
EPS Next Y-38.88%
EPS Next 2Y-10.76%
EPS Next 3Y-7.38%
EPS Next 5YN/A
Revenue Next Year-3.18%
Revenue Next 2Y-0.64%
Revenue Next 3Y0.38%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 8.99 indicates a reasonable valuation of AEO.
Compared to the rest of the industry, the Price/Earnings ratio of AEO indicates a rather cheap valuation: AEO is cheaper than 85.83% of the companies listed in the same industry.
AEO is valuated cheaply when we compare the Price/Earnings ratio to 26.60, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 7.22, the valuation of AEO can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AEO indicates a rather cheap valuation: AEO is cheaper than 86.67% of the companies listed in the same industry.
AEO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.99 | ||
| Fwd PE | 7.22 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEO indicates a rather cheap valuation: AEO is cheaper than 98.33% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, AEO is valued cheaper than 86.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.14 | ||
| EV/EBITDA | 1.77 |
4.3 Compensation for Growth
The decent profitability rating of AEO may justify a higher PE ratio.
AEO's earnings are expected to decrease with -7.38% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.64
EPS Next 2Y-10.76%
EPS Next 3Y-7.38%
5. Dividend
5.1 Amount
AEO has a Yearly Dividend Yield of 4.93%, which is a nice return.
Compared to an average industry Dividend Yield of 5.19, AEO pays a better dividend. On top of this AEO pays more dividend than 91.67% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, AEO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.93% |
5.2 History
The dividend of AEO decreases each year by -1.76%.
AEO has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of AEO decreased recently.
Dividend Growth(5Y)-1.76%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
AEO pays out 29.28% of its income as dividend. This is a sustainable payout ratio.
AEO's earnings and Dividend Rate are declining. This means the current dividend is most likely not sustainable.
DP29.28%
EPS Next 2Y-10.76%
EPS Next 3Y-7.38%
10.07
-0.04 (-0.4%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners99.18%
Inst Owner Change-1.03%
Ins Owners6%
Ins Owner Change8.48%
Market Cap1.74B
Analysts66.25
Price Target11.9 (18.17%)
Short Float %9.77%
Short Ratio1.87
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.93% |
Yearly Dividend0.5
Dividend Growth(5Y)-1.76%
DP29.28%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.22%
Min EPS beat(2)2.42%
Max EPS beat(2)6.03%
EPS beat(4)4
Avg EPS beat(4)7.27%
Min EPS beat(4)0.71%
Max EPS beat(4)19.93%
EPS beat(8)8
Avg EPS beat(8)13.76%
EPS beat(12)10
Avg EPS beat(12)9.24%
EPS beat(16)13
Avg EPS beat(16)9.03%
Revenue beat(2)0
Avg Revenue beat(2)-1.4%
Min Revenue beat(2)-1.97%
Max Revenue beat(2)-0.83%
Revenue beat(4)0
Avg Revenue beat(4)-1.69%
Min Revenue beat(4)-2.41%
Max Revenue beat(4)-0.83%
Revenue beat(8)2
Avg Revenue beat(8)-0.83%
Revenue beat(12)4
Avg Revenue beat(12)-1.21%
Revenue beat(16)6
Avg Revenue beat(16)-1.01%
PT rev (1m)-10.26%
PT rev (3m)-39.65%
EPS NQ rev (1m)-300.93%
EPS NQ rev (3m)-166.07%
EPS NY rev (1m)-26.41%
EPS NY rev (3m)-41.62%
Revenue NQ rev (1m)0.91%
Revenue NQ rev (3m)-6.44%
Revenue NY rev (1m)-0.72%
Revenue NY rev (3m)-6.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.99 | ||
| Fwd PE | 7.22 | ||
| P/S | 0.33 | ||
| P/FCF | 7.14 | ||
| P/OCF | 3.66 | ||
| P/B | 0.99 | ||
| P/tB | 1.16 | ||
| EV/EBITDA | 1.77 |
EPS(TTM)1.12
EY11.12%
EPS(NY)1.39
Fwd EY13.84%
FCF(TTM)1.41
FCFY14%
OCF(TTM)2.75
OCFY27.33%
SpS30.76
BVpS10.2
TBVpS8.65
PEG (NY)N/A
PEG (5Y)2.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.6% | ||
| ROE | 18.64% | ||
| ROCE | 15.09% | ||
| ROIC | 10.97% | ||
| ROICexc | 12.49% | ||
| ROICexgc | 13.93% | ||
| OM | 8.35% | ||
| PM (TTM) | 6.18% | ||
| GM | 39.2% | ||
| FCFM | 4.58% |
ROA(3y)5.68%
ROA(5y)4.4%
ROE(3y)12.09%
ROE(5y)9.29%
ROIC(3y)9.43%
ROIC(5y)8.68%
ROICexc(3y)11.35%
ROICexc(5y)11.11%
ROICexgc(3y)13.03%
ROICexgc(5y)13.05%
ROCE(3y)12.97%
ROCE(5y)11.94%
ROICexcg growth 3Y-18.56%
ROICexcg growth 5Y5.17%
ROICexc growth 3Y-16.08%
ROICexc growth 5Y3.41%
OM growth 3Y-11.47%
OM growth 5Y2.77%
PM growth 3Y-9.62%
PM growth 5Y6.84%
GM growth 3Y-0.46%
GM growth 5Y2.1%
F-Score7
Asset Turnover1.39
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 105.44% | ||
| Cap/Sales | 4.36% | ||
| Interest Coverage | 279.44 | ||
| Cash Conversion | 71.66% | ||
| Profit Quality | 74.17% | ||
| Current Ratio | 1.53 | ||
| Quick Ratio | 0.81 | ||
| Altman-Z | 3.33 |
F-Score7
WACC9.53%
ROIC/WACC1.15
Cap/Depr(3y)102.71%
Cap/Depr(5y)104.82%
Cap/Sales(3y)4.39%
Cap/Sales(5y)4.26%
Profit Quality(3y)140.43%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-33.73%
EPS 3Y-7.2%
EPS 5Y3.41%
EPS Q2Q%-185.29%
EPS Next Y-38.88%
EPS Next 2Y-10.76%
EPS Next 3Y-7.38%
EPS Next 5YN/A
Revenue 1Y (TTM)-0.95%
Revenue growth 3Y2.07%
Revenue growth 5Y4.34%
Sales Q2Q%-4.74%
Revenue Next Year-3.18%
Revenue Next 2Y-0.64%
Revenue Next 3Y0.38%
Revenue Next 5YN/A
EBIT growth 1Y22.08%
EBIT growth 3Y-9.64%
EBIT growth 5Y7.23%
EBIT Next Year5.62%
EBIT Next 3Y6.82%
EBIT Next 5YN/A
FCF growth 1Y-37.88%
FCF growth 3Y53.76%
FCF growth 5Y3.73%
OCF growth 1Y-17.89%
OCF growth 3Y16.22%
OCF growth 5Y2.8%