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Is American Eagle Outfitters (AEO) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is American Eagle Outfitters (AEO - Free Report) . AEO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another notable valuation metric for AEO is its P/B ratio of 1.93. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.83. AEO's P/B has been as high as 2.08 and as low as 1.20, with a median of 1.58, over the past year.

Finally, we should also recognize that AEO has a P/CF ratio of 9.37. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AEO's current P/CF looks attractive when compared to its industry's average P/CF of 10.26. Over the past 52 weeks, AEO's P/CF has been as high as 9.96 and as low as 4.61, with a median of 7.76.

If you're looking for another solid Retail - Apparel and Shoes value stock, take a look at Urban Outfitters (URBN - Free Report) . URBN is a # 1 (Strong Buy) stock with a Value score of A.

Urban Outfitters is trading at a forward earnings multiple of 11.40 at the moment, with a PEG ratio of 0.55. This compares to its industry's average P/E of 13.83 and average PEG ratio of 0.87.

URBN's Forward P/E has been as high as 16.59 and as low as 9.57, with a median of 11.52. During the same time period, its PEG ratio has been as high as 0.92, as low as 0.53, with a median of 0.64.

Urban Outfitters also has a P/B ratio of 1.68 compared to its industry's price-to-book ratio of 2.83. Over the past year, its P/B ratio has been as high as 1.86, as low as 1.07, with a median of 1.39.

These are only a few of the key metrics included in American Eagle Outfitters and Urban Outfitters strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, AEO and URBN look like an impressive value stock at the moment.


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