American Eagle Outfitters Inc (AEO)vsThe Gap, Inc. (GAP)
AEO
American Eagle Outfitters Inc
$17.54
-3.31%
CONSUMER CYCLICAL · Cap: $2.94B
GAP
The Gap, Inc.
$20.29
+0.40%
CONSUMER CYCLICAL · Cap: $7.33B
Smart Verdict
WallStSmart Research — data-driven comparison
The Gap, Inc. generates 172% more annual revenue ($15.40B vs $5.65B). GAP leads profitability with a 6.3% profit margin vs 5.0%. GAP appears more attractively valued with a PEG of 1.09. GAP earns a higher WallStSmart Score of 69/100 (B-).
AEO
Buy51
out of 100
Grade: C-
GAP
Strong Buy69
out of 100
Grade: B-
Intrinsic Value Comparison
Multi-model valuation · Graham Formula
Margin of Safety
+9.9%
Fair Value
$26.47
Current Price
$17.54
$8.93 discount
Margin of Safety
-26.3%
Fair Value
$21.75
Current Price
$20.29
$1.46 premium
Key Strengths & Concerns
Side-by-side fundamental analysis
Key Strengths
Attractively priced relative to earnings
Safe zone — low bankruptcy risk
Reasonable price relative to book value
Attractively priced relative to earnings
Earnings expanding 76.5% YoY
Every $100 of equity generates 21 in profit
Reasonable price relative to book value
Areas to Watch
5.0% margin — thin
Operating margin of 2.4%
Elevated debt levels
Weak financial health signals
1.0% revenue growth
6.3% margin — thin
Elevated debt levels
Weak financial health signals
Comparative Analysis Report
WallStSmart ResearchBull Case : AEO
The strongest argument for AEO centers on P/E Ratio, Altman Z-Score, Price/Book.
Bull Case : GAP
The strongest argument for GAP centers on P/E Ratio, EPS Growth, Return on Equity. PEG of 1.09 suggests the stock is reasonably priced for its growth.
Bear Case : AEO
The primary concerns for AEO are Profit Margin, Operating Margin, Debt/Equity. Thin 5.0% margins leave little buffer for downturns.
Bear Case : GAP
The primary concerns for GAP are Revenue Growth, Profit Margin, Debt/Equity. Debt-to-equity of 1.54 is elevated, increasing financial risk.
Key Dynamics to Monitor
GAP carries more volatility with a beta of 2.02 — expect wider price swings.
AEO is growing revenue faster at 9.7% — sustainability is the question.
GAP generates stronger free cash flow (78M), providing more financial flexibility.
Monitor APPAREL RETAIL industry trends, competitive dynamics, and regulatory changes.
Bottom Line
GAP scores higher overall (69/100 vs 51/100). Both earn "Strong Buy" and "Buy" ratings respectively — the choice depends on your investment horizon and risk tolerance.
This analysis is generated from publicly available financial data. Not financial advice.
American Eagle Outfitters Inc
CONSUMER CYCLICAL · APPAREL RETAIL · USA
American Eagle Outfitters, Inc. is a specialty retailer offering clothing, accessories, and personal care products under the American Eagle and Aerie brand names. The company is headquartered in Pittsburgh, Pennsylvania.
The Gap, Inc.
CONSUMER CYCLICAL · APPAREL RETAIL · USA
The Gap, Inc. (GAP) is a leading global apparel retailer established in 1969, renowned for its strong portfolio of brands, including Gap, Banana Republic, Old Navy, and Athleta. Headquartered in San Francisco and operating in over 40 countries, the company emphasizes quality, style, and value to cater to a diverse customer base. In response to the evolving retail environment, Gap is aggressively pursuing digital transformation and sustainability initiatives, focusing on enhancing its e-commerce capabilities and introducing innovative product offerings to drive growth and maintain its competitive edge in the marketplace.
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