AEO Intrinsic Value – AMERICAN EAGLE OUTFITTERS Reports Second Quarter Earnings for Fiscal Year 2024
September 8, 2023
🌥️Earnings Overview
On July 31, 2023, AMERICAN EAGLE OUTFITTERS ($NYSE:AEO) reported their earnings for the fiscal year 2024’s second quarter, which ended on September 6. Compared to the same period last year, the total revenue of USD 1200.9 million was 0.2% higher and net income for the quarter was USD 48.6 million, up from -42.5 million in the prior year.
Market Price
The company’s stock opened at $17.0 and closed at $17.2, representing a modest 0.2% increase from the prior closing price of 17.2. This strong performance was driven by higher-than-expected sales in both its digital and brick-and-mortar operations, as well as better-than-expected margins on product sales. This increase was attributed largely to the company’s investments in digital marketing and technology, which enabled it to better serve its customers and capture market share. Finally, AMERICAN EAGLE OUTFITTERS also reported improved profitability compared to the prior year due to cost savings and other efficiencies.
These savings were seen in areas such as inventory management, supply chain and logistics, and labor costs. Overall, this strong second quarter performance serves as a promising sign that AMERICAN EAGLE OUTFITTERS is well on its way to another successful year of growth. Investors should be encouraged by the company’s commitment to innovation, cost efficiency, and customer service, as these initiatives will continue to drive success for the company in the future. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for AEO. More…
| Total Revenues | Net Income | Net Margin |
| 5.02k | 202.88 | 4.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for AEO. More…
| Operations | Investing | Financing |
| 659.48 | -231.44 | -352.21 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for AEO. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3.43k | 1.76k | 8.47 |
Key Ratios Snapshot
Some of the financial key ratios for AEO are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 9.6% | -5.0% | 5.7% |
| FCF Margin | ROE | ROA |
| 8.7% | 10.8% | 5.2% |
Analysis – AEO Intrinsic Value
At GoodWhale, we conducted an analysis of AMERICAN EAGLE OUTFITTERS’s wellbeing. Our proprietary Valuation Line calculated the intrinsic value of AMERICAN EAGLE OUTFITTERS share to be around $18.6. Currently, AMERICAN EAGLE OUTFITTERS stock is traded at $17.2, which is a fair price undervalued by 7.6%. This presents an opportunity for investment in AMERICAN EAGLE OUTFITTERS. More…
Peers
American Eagle Outfitters Inc competes with Roots Corp, Aritzia Inc, and Zumiez Inc. for market share in the clothing retail industry. All four companies offer a variety of clothing and accessories for men, women, and children, but American Eagle Outfitters Inc has a few key differentiators. First, American Eagle Outfitters Inc operates more than 1,000 stores in the United States, compared to Roots Corp’s 85 stores, Aritzia Inc’s 97 stores, and Zumiez Inc’s 741 stores. Second, American Eagle Outfitters Inc’s product mix includes a larger proportion of private label merchandise than its competitors, which allows the company to control cost and maintain higher profit margins.
– Roots Corp ($TSX:ROOT)
Roots Corp is a Canadian retailer that specializes in selling outdoor lifestyle clothing and accessories. The company was founded in 1973 and today operates more than 120 stores across Canada. In addition to its retail stores, Roots also operates an online store and sells its products through wholesale channels.
Roots Corp has a market cap of 115.97M as of 2022. The company’s ROE for the same year is 12.62%.
– Aritzia Inc ($TSX:ATZ)
Aritzia Inc. is a Canadian women’s fashion retailer founded in 1984. The company operates over 80 stores across Canada and the United States under eight different banners. Aritzia offers a wide range of women’s clothing, accessories, and beauty products. The company has a market cap of 5.72B as of 2022 and a return on equity of 31.82%.
– Zumiez Inc ($NASDAQ:ZUMZ)
Zumiez Inc is a publicly traded company with a market capitalization of 407.32M as of 2022. The company has a strong return on equity of 16.06% and is involved in the retail industry. Zumiez Inc operates stores that sell apparel, footwear, and accessories for young men and women. The company’s focus is on action sports, such as skateboarding, snowboarding, and motocross.
Summary
American Eagle Outfitters reported an increase of 0.2% year-over-year in total revenue for the second quarter of fiscal year 2024, achieving USD 1200.9 million. Net income for the quarter improved significantly from last year’s -42.5 million to USD 48.6 million. This suggests the company is making progress and could be an attractive investment opportunity for investors looking to capitalize on the potential of a retail clothing brand. Investors should further consider the competitive landscape and American Eagle Outfitters’ financial performance compared to other players in the industry when making an investment decision.
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