American Eagle Outfitters Inc (AEO) stock analysis

P/E below its 5-year median

American Eagle Outfitters's P/E of 11.0 is below its own 5-year median of 15.8.

P/E below the industry

American Eagle Outfitters's P/E of 11.0 is below the Family Clothing Stores median of 12.0.

EV/EBITDA below its 5-year median

American Eagle Outfitters's EV/EBITDA of 5.3 is below its 5-year median of 5.7.

P/B below the industry

American Eagle Outfitters's price-to-book of 2.05 is below the Family Clothing Stores median of 2.58.

Trading below fair value

The share price of $21.55 is below our fair value estimate of $24.97.

Margin of safety under 20%

The price is 13.7% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 3.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 19.4% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 9.2% over the last twelve months; the Family Clothing Stores median is 5.5%.

Guidance lowered

American Eagle Outfitters lowered its Fiscal Year 2026 Depreciation and Amortization outlook on Sep 9, 2026.

Gross margin improving

Gross margin was 40.5% over the last twelve months, against 37.0% a year earlier.

Return on equity over 15%

Return on equity was 20.4% over the last twelve months and averaged 16.4% over five years.

Return on capital over 10%

Return on invested capital was 20.5%, above the 10% that usually covers the cost of capital.

Return on equity below the industry

American Eagle Outfitters's return on equity of 20.4% is below the Family Clothing Stores median of 40.5%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 5.9% over the last twelve months, against a 5-year average of 4.8%.

Net margin below the industry

American Eagle Outfitters's net margin of 5.9% is below the Family Clothing Stores median of 9.3%.

Low debt

Debt is 3.1% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 29.9% five years ago to 3.1%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 1090% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.59 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.57; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

American Eagle Outfitters paid dividends worth 2.3% of the share price over the last twelve months.

Yield below Treasuries

The 2.3% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; American Eagle Outfitters yields 2.3%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 25.0% of net income.

Covered by free cash flow

Dividends take 24.5% of free cash flow.