Yahoo Finance Should Value Investors Buy American Eagle Outfitters (AEO) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is American Eagle Outfitters (AEO). AEO is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 13.07 right now. For comparison, its industry sports an average P/E of 15.80. Over the last 12 months, AEO's Forward P/E has been as high as 16.30 and as low as 9.32, with a median of 13.53.
We also note that AEO holds a PEG ratio of 1.04. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AEO's PEG compares to its industry's average PEG of 1.16. AEO's PEG has been as high as 3.12 and as low as 0.58, with a median of 0.88, all within the past year.
Investors should also recognize that AEO has a P/B ratio of 2.61. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.45. Over the past year, AEO's P/B has been as high as 2.98 and as low as 1.24, with a median of 2.05.
Finally, our model also underscores that AEO has a P/CF ratio of 11.30. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AEO's P/CF compares to its industry's average P/CF of 13.08. AEO's P/CF has been as high as 12.90 and as low as 6.01, with a median of 7.91, all within the past year.
Investors could also keep in mind Levi Strauss & Co. (LEVI), an Retail - Apparel and Shoes stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Levi Strauss & Co. is trading at a forward earnings multiple of 15.71 at the moment, with a PEG ratio of 1.14. This compares to its industry's average P/E of 15.80 and average PEG ratio of 1.16.
Over the last 12 months, LEVI's P/E has been as high as 16.44, as low as 9.47, with a median of 11.33, and its PEG ratio has been as high as 3.19, as low as 0.44, with a median of 0.55.
Levi Strauss & Co. also has a P/B ratio of 4.25 compared to its industry's price-to-book ratio of 4.45. Over the past year, its P/B ratio has been as high as 4.44, as low as 2.62, with a median of 2.99.
These are only a few of the key metrics included in American Eagle Outfitters and Levi Strauss & Co. strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, AEO and LEVI look like an impressive value stock at the moment.
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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Levi Strauss & Co. (LEVI) : Free Stock Analysis Report
