Comments on: American Eagle Outstanding (AEO) Valuation

By: Free Morningstar Premium Account — Old School Value

Free Morningstar Premium Account — Old School Value — Thu, 20 Nov 2008 07:06:24 +0000

[...] AEO (March 11,2008) [...]

By: Jae Jun

Jae Jun — Fri, 27 Jun 2008 16:25:34 +0000

Hi Matty M,

AEO hasn’t really changed its business in any way and the fundamentals certainly have not deterioated. The new children’s line is eating up capital and M+O is beginning to gain ground which all points to a future growth strategy. They have plenty of cash and their business has proven it can be profitable.

I would like more money to average down further

By: Matty M

Matty M — Fri, 27 Jun 2008 14:54:05 +0000

I been buying AEO since the beggining of the year. Today it dropped in the morning to the high 13’s when I picked up some more. Only trading at 8 times earnings this is a steal, this should be a big winner in the future, thanks for the analysis.

By: Jae Jun

Jae Jun — Wed, 18 Jun 2008 14:41:45 +0000

Hi Amit,
AEO certainly isnt for everybody. A person I know shys away from all retail businesses because he doesnt like the volatility. I guess it depends on how you think of volatility. If volatility = beta = risk, I’m probably one of the most riskiest people out there!
Regarding macroeconomics, it just becomes noise to me. I won’t state why because I’ll probably just start rambling on.
Just one point about AEO. They aren’t in any form of restructuring or reorganising. Rather, they are launching other brands, trying things out for future growth and brand awareness. Nothing really has changed much before the markets dipped. I just give thanks to the market for offering me 50c $1.
Thanks for taking the time to comment.

By: Amit. D

Amit. D — Tue, 17 Jun 2008 23:01:26 +0000

Hey thanks alot for your insights, your an awesome writer! Personally, I would only invest in this company by treating it as the “risky” stocks in my portfolio. We cannot deny that future profitability highly depends on what macroeconomic situation the company has faced in the past(there’s no insurance that they will perform 50% as good as they did in the past). This is why I’d only buy it with a MOS 50% as well but I would treat it as a risky stock with great value and potential if I’m willing to use the “3 year rule” and dump it in the future if there’s clear indication that the company is facing the need to restructure itself for business viability(or other numerous reasons).