12 Most Undervalued Retail Stocks To Buy According to Analysts

8. American Eagle Outfitters, Inc. (NYSE:AEO)

Forward P/E: 10.31

Analyst Upside: 24.73%

American Eagle Outfitters (NYSE:AEO) is a global specialty retailer that offers accessories, clothing, and personal care items under its American Eagle and Aerie brands. The company’s operations are split into two segments, with American Eagle functioning as an apparel and jeans brand, and Aerie operating as a lifestyle brand that offers apparel, intimates, activewear, and swim collections. OFFLINE by Aerie offers an elaborate collection of activewear and accessories.

The company’s profitability model is strong, which is why analysts are bullish on the stock. It delivered its sixth consecutive quarter of record revenue while simultaneously achieving meaningful operating income growth in fiscal Q2 2024. It is making consistent progress across its strategic priorities, which align with the company’s multi-year growth plan.

American Eagle Outfitters (NYSE:AEO) functions on three key pillars, including amplification of its brands, optimization of its operations, and execution with financial discipline. Strength across these three pillars resulted in a fiscal Q2 2024 revenue of $1.3 billion, a new record for the company. It managed a 4% comparable store sales growth and an 8% total revenue increase for the same quarter, which highlights its strong operation model.

Since American Eagle Outfitters (NYSE:AEO) exited fiscal Q2 2024 with a healthy balance sheet with $192 million in cash and no debt, it leveraged its healthy cash flow to undertake long-term investments in its brands and operations. It also returned $120 million in cash to its shareholders through a combination of share repurchases and dividends, bringing year-to-date returns to $180 million in line with the company’s commitment to deliver value to its shareholders. It ranks eighth on our list of the 12 most undervalued retail stocks to buy according to analysts.