As of April 3, 2026, American Eagle Outfitters Inc has a Discounted Cash Flow (DCF) derived fair value of $52.87 per share. With the current market price at $16.84, this represents a potential upside of 213.9%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $44.14 |
| DCF Fair Value (10-year) | $52.87 |
| Potential Upside (5-year) | 162.1% |
| Potential Upside (10-year) | 213.9% |
| Discount Rate (WACC) | 5.6% - 8.5% |
Revenue is projected to grow from $5497 million in 01-2026 to $8686 million by 01-2036, representing a compound annual growth rate of approximately 4.7%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 01-2026 | 5497 | 3% |
| 01-2027 | 5737 | 4% |
| 01-2028 | 5903 | 3% |
| 01-2029 | 6454 | 9% |
| 01-2030 | 6779 | 5% |
| 01-2031 | 6915 | 2% |
| 01-2032 | 7053 | 2% |
| 01-2033 | 7450 | 6% |
| 01-2034 | 7835 | 5% |
| 01-2035 | 7991 | 2% |
| 01-2036 | 8686 | 9% |
Net profit margin is expected to improve from 3% in 01-2026 to 8% by 01-2036, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 01-2026 | 186 | 3% |
| 01-2027 | 248 | 4% |
| 01-2028 | 309 | 5% |
| 01-2029 | 396 | 6% |
| 01-2030 | 476 | 7% |
| 01-2031 | 546 | 8% |
| 01-2032 | 556 | 8% |
| 01-2033 | 588 | 8% |
| 01-2034 | 618 | 8% |
| 01-2035 | 630 | 8% |
| 01-2036 | 685 | 8% |
with a 5-year average of $209 million. Projected CapEx is expected to maintain at approximately 4% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 01-2027 | 230 |
| 01-2028 | 230 |
| 01-2029 | 229 |
| 01-2030 | 246 |
| 01-2031 | 255 |
| 01-2032 | 265 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 15 |
| Days Inventory | 68 |
| Days Payables | 29 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2027 | 567 | 85 | 230 | 2 | 250 |
| 2028 | 649 | 106 | 236 | 35 | 272 |
| 2029 | 766 | 136 | 259 | 41 | 330 |
| 2030 | 891 | 164 | 272 | 25 | 431 |
| 2031 | 993 | 188 | 277 | 11 | 517 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 44.14 | 162.1% |
| 10-Year DCF (Growth) | 52.87 | 213.9% |
| 5-Year DCF (EBITDA) | 28.54 | 69.5% |
| 10-Year DCF (EBITDA) | 37.30 | 121.5% |
Is American Eagle Outfitters Inc (AEO) a buy or a sell? American Eagle Outfitters Inc is definitely a buy. Based on our DCF analysis, American Eagle Outfitters Inc (AEO) appears to be significantly undervalued with upside potential of 213.9%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $16.84.