AEO - American Eagle Likely Undervalued But Aerie Growth And Margin Leverage Are Critical
2024-07-02 05:00:20 ET
Summary
- American Eagle Outfitters has seen better-than-expected sales and margin improvement in a challenging retail environment, with significant gross margin improvements and surprising strength in the legacy AE brand.
- The long-term potential of Aerie is important to the future value of AEO; management has been quite methodical with store expansion and growth targets call for only mid-to-high single-digit growth.
- Fair value appears to be in the mid-$20's today, with further upside tied to incremental margin leverage.
Despite a still-challenging environment for more traditional hybrid youth retailers (hybrid in this case meaning significant physical store and digital presences), American Eagle Outfitters ( AEO ) has done alright since my last update , with better-than-expected sales and margin improvement....
American Eagle Likely Undervalued, But Aerie Growth And Margin Leverage Are Critical