Value
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.0 |
| P/S | 10.0 |
| EV/EBITDA | 6.6 |
| Fwd P/E | 9.3 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 10.1x
- ▸PEG: 0.48
- ▸Attractively valued
AEO · Why this verdict
Why American Eagle Outfitters (AEO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.0/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
American Eagle is a cheaply valued (10.2x forward P/E) apparel retailer with strong growth and a perfect beat streak, but at $19.61 it trades 17.5% above the $16.18 analyst target and carries middling quality.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The price of $19.61 is above the $16.18 analyst target (upside of -17.5%), with downside of 12.4% and a reward-to-risk of -1.4. Analyst target | Price should ease toward the target, or analyst targets should rise above $19.61. | →Stable |
| CounterTargets lag after a large rerating, and four straight beats could lift forward estimates. | ||
Forward P/E of 10.2x and PEG of 0.39 give a value score of 7.9. Valuation breakdown | Forward P/E should stay below 12x as earnings are delivered. | →Stable |
| CounterApparel retail earnings are cyclical and low multiples often precede earnings downgrades. | ||
American Eagle has beaten estimates in 4 of 4 recent quarters with an average surprise of +82.8%. Earnings | EPS should beat again at the next report on 2026-12-01. | ↑Improving |
| CounterA massive average surprise comes from very low estimates, and future beats get harder as expectations catch up. | ||
Quality score is 4.8, with free cash flow at only 63% of net income despite a Piotroski F-Score of 8/9. Quality breakdown | FCF/NI should rise above 80% and quality above 5.5. | →Stable |
| CounterThe F-Score of 8/9 shows sound underlying health, and retail free cash flow swings with seasonal inventory. | ||
Revenue is seasonal ($1.81B in January 2026 vs $1.20B in May 2026) and short interest is 12%, with growth scoring 7.2. Key risks | Quarterly revenue should reach the $1.45B estimate and short interest fall below 8%. | ↓Deteriorating |
| CounterHigh short interest on a stock with rising on-balance volume could fuel a squeeze, offsetting negative fundamentals. | ||
The price of $19.61 is above the $16.18 analyst target (upside of -17.5%), with downside of 12.4% and a reward-to-risk of -1.4.
→StableAnalyst target
- Expectation
- Price should ease toward the target, or analyst targets should rise above $19.61.
CounterTargets lag after a large rerating, and four straight beats could lift forward estimates.
Forward P/E of 10.2x and PEG of 0.39 give a value score of 7.9.
→StableValuation breakdown
- Expectation
- Forward P/E should stay below 12x as earnings are delivered.
CounterApparel retail earnings are cyclical and low multiples often precede earnings downgrades.
American Eagle has beaten estimates in 4 of 4 recent quarters with an average surprise of +82.8%.
↑ImprovingEarnings
- Expectation
- EPS should beat again at the next report on 2026-12-01.
CounterA massive average surprise comes from very low estimates, and future beats get harder as expectations catch up.
Quality score is 4.8, with free cash flow at only 63% of net income despite a Piotroski F-Score of 8/9.
→StableQuality breakdown
- Expectation
- FCF/NI should rise above 80% and quality above 5.5.
CounterThe F-Score of 8/9 shows sound underlying health, and retail free cash flow swings with seasonal inventory.
Revenue is seasonal ($1.81B in January 2026 vs $1.20B in May 2026) and short interest is 12%, with growth scoring 7.2.
↓DeterioratingKey risks
- Expectation
- Quarterly revenue should reach the $1.45B estimate and short interest fall below 8%.
CounterHigh short interest on a stock with rising on-balance volume could fuel a squeeze, offsetting negative fundamentals.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.7 |
| ROA | 3.5 |
| Gross margin | 3.5 |
| Op margin | 0.8 |
| Net margin | 2.9 |
| Current ratio | 5.8 |
| FCF quality | 4.8 |
| Moat | 6.1 |
| Piotroski F | 8.9 |
- ▸Earnings quality warning: 63% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
7.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.4 |
| EPS growth | 10.0 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 8.9 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 1.3 |
- ▸Overbought (RSI 71)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.3 |
| erm sentiment | 5.0 |
Insider
6.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.7 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $129,760 (0.004% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.7 |
| quality rank | 2.7 |
| growth rank | 4.7 |
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.8 |
| support resistance | 2.7 |
| 52w position | 4.1 |
| gap | 5.0 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.9 |
| days to cover | 7.7 |
| volatility | 3.8 |
| put call | 5.2 |
| implied vol | 1.6 |
| beta | 5.7 |
| debt equity | 4.8 |
- ▸High IV: 70%
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.8 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.4=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=6.5>=5.0 recovering
Reward-to-Risk
-1.42
Upside
-17.2%
Downside
12.1%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 71
EdgeCatalyst-Driven — Earnings in 27d with 3/4 beat streak
SuitabilityAggressive — Beta 1.34>1.3, MCap $3.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.4=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.42 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.9, Growth at 7.2, and Catalyst at 6.7; the weakest are Technical at 3.4, Risk (lower is worse) at 4.7, and Sentiment at 4.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.42 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price Above Analyst Target
Trip ifPrice exceeds 30% above the $16.18 analyst target, above about $21.
- P2Attractive Earnings Multiple
Trip ifForward P/E rises above 14x from current 10.2x.
- P3Perfect Beat Streak
Trip ifEPS surprise falls below 0% in the next reported quarter.
- P4Mid Quality Weak Cash Conversion
Trip ifQuality score falls below 4.0 from current 4.8.
- P5Seasonal Revenue And Short Interest
Trip ifShort interest rises above 18% from current 12%.