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How Analysts View American Eagle Outfitters after Fiscal 4Q17

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Mar. 14 2018, Updated 11:15 a.m. ET

Rating summary

As of March 12, 2018, there were 18 analysts covering American Eagle Outfitters (AEO) stock, and 50% of them were recommending a “hold.” About 44% were recommending a “buy,” and 6% were recommending a “sell.”

American Eagle Outfitters reported fiscal 4Q17 results on March 8, 2018. Its revenue of $1.23 billion beat analysts’ estimate of $1.21 billion, and its adjusted EPS (earnings per share) was $0.44, which was in line with analysts’ projections. However, an intense promotional backdrop proved a drag with its gross margin declining 80 bps (basis points) to 34.6%, causing the stock to plummet 9.4% on March 8.

Following the company’s results, only RBC has raised its price target. It raised it to $22 from $19 projected earlier. There has been no other price revision activity, but there might be some changes in the coming days.

Currently, analysts’ 12-month average target price for the company is $20.12, which reflects a 2.5% upside to its stock price on March 12, 2018.

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Where do peers stand?

Of the 16 analysts covering Abercrombie & Fitch (ANF), 50% have given it a “hold” rating. For Gap (GPS), 81% of the 26 analysts covering the stock have recommended a “hold.” Urban Outfitters (URBN) received a “hold” rating from 52% of the analysts covering the stock.

Currently, analysts’ target price for Abercrombie & Fitch’s is $21.92, reflecting a 0.2% upside to the stock price as of March 12, 2018. Gap’s mean target price is $34.40, which indicates a 6.7% upside to its stock price as of March 12, 2018. Urban Outfitters’ target price is $38.14, implying an 8.8% upside to its stock price as of March 12, 2018.

Valuation overview

On March 12, 2018, American Eagle Outfitters was trading at a 12-month forward PE (price-to-earnings) ratio of 13.5x. It’s trading at a lower valuation multiple than some of its peers. Abercrombie & Fitch and Urban Outfitters were trading at 12-month forward PE ratios of 28.1x and 15.8x, respectively, on March 12, 2018. Gap was trading at a forward PE ratio of 12.2x, which was lower than American Eagle Outfitters.

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