American Eagle Outfitters Inc. (AEO) is an apparel and accessory retailer with company stores throughout North America, China, Hong Kong, and the United Kingdom. The company’s primary brand, American Eagle Outfitters, sells casual apparel and accessories that target 15- to 25-year-old men and women.
The company has seen growth across both the American Eagle (AE) and Aerie brands. AEO has even recorded its 26th successive quarter of double-digit growth for the Aerie brand. In addition, the company is progressing with its Real Power, Real Growth plan.
AEO has a current ratio of 2.0, which indicates it has more than enough liquidity to handle short-term obligations. However, its net profit margin of 3.4% is less than the industry average. From a growth standpoint, EPS has fallen an average of 19.7% per year over the past three years, but is expected to rise 5,250% this year.
The stock appears undervalued based on its forward P/E of 15.43. Its price-to-sales ratio of 1.5 is also below the industry average. AEO’s stock has been trending higher since last fall but has shown mixed momentum over the past few months as shown in the chart below.
Take a look at the 1-year chart of AEO below with added notations:
AEO has moved into a sideways trading range over the past several months. The range’s resistance is at $38 (red), while the support area is around $32 (green). AEO has rallied back to the middle of the range, but at some point the stock will have to break out of it, one way or the other.
Click Here to Read the Greatest Trading Book Ever Written
The possible long position is on a breakout above $38. The ideal short opportunity would be on a break below $32.
Want to Discover More Great Trades?
I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don’t work at all.
That is why I recently put together this special report to help investors focus on the only 5 chart patterns that matter…the ones that lead to the most timely and profitable stock trades. Click below to get your copy now!
5 WINNING Stock Chart Patterns
Have a good trading day!
Good luck!
Christian Tharp, CMT
Want More Great Investing Ideas?
AEO shares were trading at $35.34 per share on Thursday morning, down $0.17 (-0.48%). Year-to-date, AEO has gained 77.81%, versus a 19.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...
More Resources for the Stocks in this Article
| Ticker | POWR Rating | Industry Rank | Rank in Industry |
| AEO | Get Rating | Get Rating | Get Rating |
