American Eagle Outfitters (AEOS) is January's undervalued company of the month, according to Better Investing. Reporter Kevin Lamiman provides a nice summary of the Pittsburgh, PA-based teen retailer. Oddly, though, no estimate of American Eagle's intrinsic value is given. So while the background color is useful, what we care about most are the assumptions that support their "undervalued" thesis. Maybe in future columns Better Investing can share their valuation drivers. (Hint, hint...)The other item from the column that caught my eye is Value Line's 22% long-term annual earnings growth forecast. Seems aggressive to me, especially since the consensus from the other 31 analysts is 15% a year for the next five years. At $21, you'll make money with American Eagle even if earnings grow in the high single-digits every year for the next five years.American Eagle has been situated in the Earnings Power Chart's upper-right box during 2001-2004. When a company is situated in the upper-right box, it is profitable in the broadest possible sense. If you are a conservative growth investor, these are the kinds of companies that you want to own.Hewittlong AEOS
Wow Hewitt,I'm stoked to find this board today after some reading on the IV reading list page..I just bumped into this post and its too late to deal with SEC filings.DO you have a little background info on this company like specifically how they managed to triple earnings per share in from 03-04?and still maintain a p/e of 11? Also, I don't like the dilution of 6-7% much, how do you factor that in?
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