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1. Company Snapshot

1.a. Company Description

American Eagle Outfitters, Inc.operates as a specialty retailer that provides clothing, accessories, and personal care products under the American Eagle and Aerie brands.The company provides jeans, and specialty apparel and accessories for women and men; and intimates, apparel, activewear, and swim collections, as well as personal care products for women.


It also offers graphic tees and other clothing products under the Tailgate brand name; and menswear products under the Todd Snyder New York brand name.As of January 29, 2022, the company operated 880 American Eagle stores, 244 Aerie brand stand-alone stores, and five Todd Snyder stores in the United States, Canada, Mexico, and Hong Kong.It also ships to 81 countries through its Websites; and offers its merchandise at 260 locations operated by licensees in 28 countries, as well as provides products through its Websites ae.com, aerie.com, and toddsnyder.com.


American Eagle Outfitters, Inc.was founded in 1977 and is headquartered in Pittsburgh, Pennsylvania.

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1.b. Last Insights on AEO

Breaking News: American Eagle Outfitters Inc reported strong Q3 results, beating analyst expectations. Net revenue rose 6% to $1.36 billion, with comparable sales up 4%. The company's Aerie brand and American Eagle chain saw significant momentum. As a result, American Eagle raised its full-year guidance despite ongoing tariff pressures. Analysts boosted their forecasts following the better-than-expected earnings. Some analysts recommend a buy, citing the company's solid Q3 gains and lifted Q4 outlook.

1.c. Company Highlights

2. American Eagle Outfitters' Q3 2025 Earnings: A Strong Performance

American Eagle Outfitters (AEO) reported a record revenue of $1.4 billion in Q3 2025, a 6% increase from the previous year, driven by a 4% increase in comparable sales. The company's operating income was $113 million, exceeding guidance, with diluted EPS of $0.53, up 10% from the adjusted EPS last year. The earnings per share (EPS) came in higher than expected, beating analyst estimates of $0.43. The gross margin declined 40 basis points to 40.5%, due to net tariff pressure of $20 million.

Publication Date: Dec -04

📋 Highlights
  • Record Q3 Revenue:: AEO reported $1.4 billion in revenue, a 6% year-over-year increase, driven by 4% comp sales growth and Aerie’s 11% comp surge.
  • Earnings Outperformance:: Operating income reached $113 million (exceeding guidance), with diluted EPS at $0.53, up 10% from adjusted EPS in 2024.
  • Aerie Dominance:: Aerie’s 11% comp growth (vs. AE’s 1%) fueled by strength in denim, intimates, and Offline, with 1 million+ new loyalty members added recently.
  • Q4 Guidance Raised:: Operating income projected at $155–160 million with 8–9% comp growth, despite $50 million in incremental tariff costs (300 bps margin impact).

Segment Performance

Aerie's comp growth was 11%, driven by strength across all categories, including intimates, apparel, sleep, and Offline. American Eagle's comp growth was 1%, driven by trend-right new fall collections, bold marketing, and exciting product collaborations. The company's jeans business, particularly in Aerie, is performing well, with a notable success in denim. As CEO Jay Schottenstein stated, the company is seeing an encouraging response to new product collections, with Aerie and Offline generating exceptional growth.

Guidance and Outlook

The company raised its Q4 operating income guidance to $155-160 million, based on comp sales growth of 8-9%. The guidance includes approximately $50 million of incremental tariff costs. Inventory is expected to grow in line with sales, with an 8-9% comp growth expected in Q4. For 2025, around 40-50 new stores are planned, mainly in Aerie and Offline.

Valuation

With a P/E Ratio of 19.43 and an EV/EBITDA of 11.07, the stock appears to be reasonably valued. The company's ROE of 13.0% and ROIC of 5.72% indicate a strong ability to generate returns on equity and invested capital. The Dividend Yield of 2.09% provides a relatively stable source of return for investors.

Growth Prospects

Aerie's growth is driven by various channels and categories, with a notable performance in denim. The brand's awareness is only at 55-60%, providing a runway for growth into 2026. The company plans to continue investing in marketing, including recent campaigns with celebrities, and expects to end the year with a marketing expense as a percentage of sales in the mid-4% range. Analysts estimate next year's revenue growth at 2.7%, indicating a moderate growth trajectory.

3. NewsRoom

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American Eagle boosts forecast after strong lift from Sydney Sweeney ad campaign

Dec -04

Source: foxbusiness.com

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Surging Earnings Estimates Signal Upside for American Eagle (AEO) Stock

Dec -04

Source: zacks.com

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Creative Planning Sells 31,186 Shares of American Eagle Outfitters, Inc. $AEO

Dec -04

Source: defenseworld.net

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American Eagle Outfitters Target of Unusually Large Options Trading (NYSE:AEO)

Dec -04

Source: defenseworld.net

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Today's Market: Dow Rises, Nasdaq Climb Despite Microsoft Sparks Fresh AI Selloff

Dec -04

Source: gurufocus.com

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Market Today: Fed hopes lift stocks; AWS AI rollout; Prada-Versace deal

Dec -03

Source: gurufocus.com

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Why American Eagle Outfitters Stock Surged Today

Dec -03

Source: fool.com

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AEO Inc. Declares a Regular Quarterly Dividend of $0.125 Per Share

Dec -03

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.15%)

6. Segments

American Eagle

Expected Growth: 4.5%

American Eagle's 4.5% growth is driven by its strong brand reputation, effective marketing strategies, and focus on denim and trendy apparel. The brand's ability to adapt to changing consumer preferences, invest in e-commerce, and expand its loyalty program also contribute to its growth. Additionally, American Eagle's efforts to improve operational efficiency and optimize inventory management have helped to boost sales and profitability.

Aerie

Expected Growth: 4.2%

Aerie's 4.2% growth is driven by increasing demand for intimates and personal care products, particularly among Gen Z and millennial consumers. Strong brand recognition, expanded product offerings, and successful marketing campaigns have contributed to the segment's growth. Additionally, Aerie's focus on body positivity, inclusivity, and sustainability resonates with customers, leading to increased loyalty and retention.

Other

Expected Growth: 3.8%

American Eagle Outfitters' 3.8% growth in 'Other' segment is driven by increased demand for online services, expansion of loyalty programs, and strategic partnerships. Additionally, the company's focus on experiential retail, such as events and workshops, has contributed to the growth. Furthermore, the 'Other' segment benefits from the company's investments in digital capabilities, including mobile apps and e-commerce platforms.

Intersegment Elimination

Expected Growth: 0.0%

Intersegment Elimination from American Eagle Outfitters, Inc. shows 0.0% growth, indicating no significant transactions between segments. This is likely due to the company's focus on standalone operations, minimal intercompany sales, and efficient supply chain management, resulting in no material eliminations required.

7. Detailed Products

Denim Jeans

American Eagle Outfitters offers a wide range of denim jeans for men and women, including skinny, relaxed, and boyfriend styles.

Graphic T-Shirts

The company offers a variety of graphic t-shirts with trendy designs, logos, and slogans for men and women.

Sweaters and Hoodies

American Eagle Outfitters sells a range of sweaters and hoodies for men and women, perfect for colder weather.

Dresses and Skirts

The company offers a variety of dresses and skirts for women, including mini, midi, and maxi styles.

Accessories

American Eagle Outfitters sells a range of accessories, including hats, scarves, belts, and bags.

Intimates and Sleepwear

The company offers a range of intimates and sleepwear for women, including bras, panties, and loungewear.

AE Studio

American Eagle Outfitters' AE Studio offers a premium denim line with high-quality, fashion-forward designs.

Aerie

Aerie is American Eagle Outfitters' intimates and lifestyle brand, offering a range of intimates, sleepwear, and apparel.

Tailgate

American Eagle Outfitters' Tailgate brand offers collegiate apparel and accessories for men and women.

8. American Eagle Outfitters, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

American Eagle Outfitters, Inc. faces moderate threat from substitutes, as customers have various alternatives for fashion apparel, but the company's strong brand image and quality products help to mitigate this threat.

Bargaining Power Of Customers

American Eagle Outfitters, Inc. faces high bargaining power from customers, as they have numerous options for fashion apparel and can easily switch to competitors, making it essential for the company to maintain competitive pricing and quality.

Bargaining Power Of Suppliers

American Eagle Outfitters, Inc. has a relatively low bargaining power from suppliers, as the company is a significant buyer of raw materials and has established relationships with suppliers, giving it negotiating power.

Threat Of New Entrants

American Eagle Outfitters, Inc. faces a moderate threat from new entrants, as the fashion apparel industry has relatively low barriers to entry, but the company's established brand and scale of operations provide a competitive advantage.

Intensity Of Rivalry

American Eagle Outfitters, Inc. operates in a highly competitive industry, with numerous established players, making it essential for the company to focus on differentiating its products and services to maintain market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.57%
Debt Cost 3.95%
Equity Weight 59.43%
Equity Cost 11.82%
WACC 8.63%
Leverage 68.27%

11. Quality Control: American Eagle Outfitters, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Urban Outfitters

A-Score: 5.4/10

Value: 6.3

Growth: 6.9

Quality: 6.1

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

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Gap

A-Score: 5.0/10

Value: 6.6

Growth: 4.7

Quality: 5.2

Yield: 7.0

Momentum: 5.0

Volatility: 1.3

1-Year Total Return ->

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Carter's

A-Score: 4.5/10

Value: 7.1

Growth: 3.8

Quality: 4.5

Yield: 8.0

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

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American Eagle Outfitters

A-Score: 4.4/10

Value: 6.6

Growth: 4.6

Quality: 4.5

Yield: 6.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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Abercrombie & Fitch

A-Score: 4.3/10

Value: 7.1

Growth: 8.3

Quality: 6.8

Yield: 0.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Boot Barn

A-Score: 4.2/10

Value: 2.3

Growth: 8.0

Quality: 5.9

Yield: 0.0

Momentum: 5.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.86$

Current Price

23.86$

Potential

-0.00%

Expected Cash-Flows