American Eagle Outfitters (AEO), Abercrombie & Fitch Co. (ANF), Aeropostale, Inc. (ARO): A Bargain Remains in the Apparel Business

Page 1 of 2

American Eagle Outfitters (NYSE:AEO) is one of the leading specialty retailers targeting the younger consumers (and the young at heart). With rising revenues, a pretty solid track record of earnings, and one of the better dividend yields in the sector, American Eagle Outfitters (NYSE:AEO) seems to be doing just fine. Additionally, despite their success, shares are still about 18% below their 52-week high, at a time when the entire market seems to be making new highs daily. Could American Eagle Outfitters (NYSE:AEO) possibly be one of the few bargains left in this bull market?

Bullish options trade on American Eagle looks for shares to extend runAmerican Eagle

American Eagle Outfitters (NYSE:AEO) sells casual apparel, footwear, and accessories, primarily aimed at the young adult (15 to 25) demographic, a group that accounts for about 23% of all apparel spending. The company also has a thriving children’s apparel business, making up about 17% of the company’s total sales. The rest is dominated by women’s apparel (55%), with men’s making up the rest.

The company currently has about 900 locations, and is currently growing its other brands, such as “aerie,” which targets young females, and also through the renovation of existing stores. The company plans approximately 50 renovations this year.

The Numbers

Some quick stats on American Eagle Outfitters (NYSE:AEO), which we’ll use to compare the company with its competitors a little later. American Eagle Outfitters (NYSE:AEO) trades for just 14.1 times fiscal year 2013’s earnings (which ended January 31), and the consensus calls for pretty nice growth going forward. American Eagle is projected to earn $1.49 per share for the current fiscal year (2014), and this amount is projected to rise to $1.68 and $1.88 in fiscal years 2015 and 2016, respectively. This translates to a 3-year average forward growth rate of 10.6% annually, much better than is generally associated with such a low P/E.

Now, a lot of the time, a reason for a low P/E relative to growth is a poor balance sheet. So, American Eagle must have considerable debt, right? Wrong. In fact, the company has absolutely zero long-term debt and about $630 million in cash. This is extremely significant for a company whose total market cap is about $3.8 billion. When accounting for the cash in the valuation, American Eagle’s business alone is trading for just 11.8 times earnings.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!