Should you buy shares of American Eagle Outfitters Inc (AEO) on Friday?
American Eagle Outfitters Inc (AEO) receives a strong review rating of 84 from InvestorsObserver data analysis. The proprietary ranking system focuses on the underlying health of a company through analysis of its stock price, earnings and growth rate. AEO is better valued than 84% of the stock based on these valuation analyses. Investors primarily focused on buy-and-hold strategies will find the valuation ranking relevant to their goals when making investment decisions.
AEO’s trailing 12-month price-to-earnings (PE) ratio of 8.4 puts it below the historical average of around 15. AEO is good value at its current trading price, as investors are paying less than what its value compared to the profits of the company. AEO’s trailing 12-month earnings per share (EPS) of 2.03 justifies what it is currently trading at in the market. However, rolling PE ratios do not take into account a company’s projected growth rate, causing some companies to have high PE ratios due to high growth, which could attract investors even if current earnings are weak. AEO has a 12-month PE-to-Growth (PEG) ratio of 0.8. Markets are overvaluing AEO against its projected growth as its PEG ratio is currently above the fair market value of 1. The PEG of 2.02999997 comes from its forward price to earnings ratio divided by its growth rate. PEG ratios are one of the most widely used valuation metrics due to the incorporation of more fundamental business metrics and the focus on the future of the business rather than about his past.
AEO’ is adequately valued at its current price due to a properly priced PEG ratio despite strong growth. AEO’s PE and PEG are around the market average, resulting in an average valuation score. Click here for the full American Eagle Outfitters Inc (AEO) stock report.
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