I normally don't invest in traditional “mall” companies, but the valuation on AEO stock seems compelling after they dropped 7% in the premarket today (as of this post).
The PE and forward PE is around 6.5, the PS is 0.5 and PB is 1.5. Looking forward, the expected PEG ratio is 0.75. Analysts are expecting decent revenue growth over the next 5 years, but I don't know how likely that will actually be. But even if the analysts are wrong, the valuation still seems fair if the revenue just stays about the same the next 5 years. They can still continue to buy back stock. While not the past couple years cause of Covid, they have a longer-term history of stock buybacks. They also pay a 5.5% dividend which eats up only about a third of their earnings. Their longterm debt is also manageable with their current earnings.
A company like this is risky and has uncertainty because they get a lot of business from malls and ever changing consumer trends, but the good valuation seems to outweigh the uncertainties.
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