The Foolish Bottom Line
If the above reasons still haven’t convinced you of the gravity of Aeropostale’s situation, then perhaps this table – which measures its fundamental performance against Gap, Abercrombie & Fitch and American Eagle Outfitters – will.
|Forward P/E||5-year PEG||Price to Sales (ttm)||Return on Equity (ttm)||Debt to Equity||Profit Margin||Same-store sales growth (recent qtr.)|
|Aeropostale, Inc. (NYSE:ARO)||17.63||2.25||0.48||8.52%||No debt||1.46%||-8%|
|The Gap Inc. (NYSE:GPS)||12.46||1.46||1.10||40.18%||43.06||7.25%||+5%|
|Abercrombie & Fitch Co. (NYSE:ANF)||12.00||0.72||0.87||14.47%||3.60||5.84%||+1%|
|American Eagle Outfitters (NYSE:AEO)||11.99||1.15||1.16||20.02%||No debt||6.68%||+4%|
|Advantage||American Eagle||Abercrombie||Aeropostale||Gap||Aeropostale, American Eagle||Gap||Gap|
Source: Yahoo Finance, March 16, quarterly reports
Aeropostale, Inc. (NYSE:ARO)’s weak same-store sales growth, dangerously slim profit margin, mediocre growth prospects (based on its PEG ratio), and high P/E valuation all point to lower prices down the road.
Finally, a look at Aeropostale’s top and bottom line growth over the past three years versus these three rivals simply serves as a final confirmation of the company’s bleak future.
All U.S. apparel retailers are expected to suffer to some degree in the first half of 2013 due to macro issues – but some will fall much farther than others. Avoid Aeropostale – this company could become as defunct as the French aviation company for which it is named.
The article Aeropostale’s Epic Nosedive to Unprofitability originally appeared on Fool.com.
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