American Eagle Outfitters (American Eagle Outfitters) Intrinsic Value: DCF (Dividends Based) : $15.77 (As of Apr. 27, 2024)

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American Eagle Outfitters Intrinsic Value: DCF (Dividends Based) Chart

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Competitive Comparison of American Eagle Outfitters's Intrinsic Value: DCF (Dividends Based)

For the Apparel Retail subindustry, American Eagle Outfitters's Price-to-DCF (Dividends Based), along with its competitors' market caps and Price-to-DCF (Dividends Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

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American Eagle Outfitters's Price-to-DCF (Dividends Based) Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, American Eagle Outfitters's Price-to-DCF (Dividends Based) distribution charts can be found below:

* The bar in red indicates where American Eagle Outfitters's Price-to-DCF (Dividends Based) falls into.

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American Eagle Outfitters Intrinsic Value: DCF (Dividends Based) Calculation

This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. The calculation method is the same as Discounted Cash Flow model except adjusted dividend are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DDM calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.66%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Dividend Growth Rate in the growth stage: g1 = 5%
The Growth Rate in the growth stage is initially set as the default 10-Year Dividend Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year Dividend Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year Dividend Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> American Eagle Outfitters's average Dividend Growth Rate in the past 10 years was -2.00%, which is less than 5%. GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Dividends per Share: adjusted dividends per share = $1.3662.
GuruFocus uses adjusted dividends per share by default to ensure that the valuation reflects the total value of the company, as the actual dividend is only a portion of the total value.

All of the default settings can be changed in the DCF calculator and the results are calculated automatically.

American Eagle Outfitters's Intrinsic Value: DCF (Dividends Based) for today is calculated as:

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.11) = 0.94594594594595
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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American Eagle Outfitters  (NYSE:AEO) Intrinsic Value: DCF (Dividends Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Dividends model evaluates the companies based on their power of future dividend distribution instead of their assets.

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Be Aware

What you need to know about Discounted Dividends model:

1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) and Intrinsic Value: DCF (Dividends Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

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American Eagle Outfitters Intrinsic Value: DCF (Dividends Based) Related Terms

Thank you for viewing the detailed overview of American Eagle Outfitters's Intrinsic Value: DCF (Dividends Based) provided by GuruFocus.com. Please click on the following links to see related term pages.

Predictability Rank Intrinsic Value: Projected FCF Intrinsic Value: DCF (FCF Based) Intrinsic Value: DCF (Earnings Based) Margin of Safety % (DCF Dividends Based) Margin of Safety % (DCF FCF Based) Margin of Safety % (DCF Earnings Based) 5-Year Dividend Growth Rate Dividends per Share

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American Eagle Outfitters (American Eagle Outfitters) Business Description

Executives

Jennifer M. Foyle	officer: Global Brand President-aerie	77 HOT METAL STREET, PITTSBURGH PA 15203
Cary D Mcmillan	director	SARA LEE BRANDED APPAREL, 70 W MADISON STREET, CHICAGO IL 60602
Michael R Rempell	officer: EVP, COO NY Design Center	77 HOT METAL STREET, PITTSBURGH PA 15203
David M. Sable	director	77 HOT METAL STREET, PITTSBURGH PA 15203-2329
Noel Joseph Spiegel	director	RADIAN GROUP INC., 1601 MARKET STREET, PHILADELPHIA PA 19103
Andrew J. Mclean	officer: EVP & Chief Commercial Officer	77 HOT METAL STREET, PITTSBURGH PA 15203
Steven A Davis	director	3776 SOUTH HIGH ST, COLUMBUS OH 43207
Marisa Baldwin	officer: EVP - CHRO	C/O ASCENA RETAIL GROUP, INC., 933 MACARTHUR BOULEVARD, MAHWAH NJ 07430
Charles F Kessler	officer: EVP-Mdsing&Design Off-AEBrand	6301 FITCH PATH, NEW ALBANY OH 43054
Thomas R Ketteler	director	2301 WEST LAFAYETTE, DETROIT MI 48216
Stacy Siegal	officer: EVP and General Counsel	800 COMMONWEALTH DRIVE, SUITE 100, WARRENDALE PA 15086
Keefer James H Jr	officer: VP, Controller & CAO	77 HOT METAL STREET, PITTSBURGH PA 15203
Michael A. Mathias	officer: EVP and CFO	77 HOT METAL STREET, PITTSBURGH PA 15203
Deborah A Henretta	director	ONE RIVERFRONT PLAZA, CORNING NY 14831
Jay L Schottenstein	director, 10 percent owner, officer: Chairman of the Board	1800 MOLER ROAD, COLUMBUS OH 43207