Ariana Research
Long/short equity, deep value, special situations

American Eagle Outfitters Offers Investors Multiple Ways To Win

Executive Summary

American Eagle Outfitters, Inc. (NYSE:AEO) ("American Eagle", "AEO" or the "Company") is a leading young adult retailer. The Company has a market cap of $2.86B and an enterprise value of $2.45B. As of the TTM 8/03/13, the Company generated $3.4B in revenues and $508.1MM in EBITDA, respectively.

The market is offering American Eagle at an 11% free cash flow yield, which we believe is a compelling buying opportunity at current prices. Why does this opportunity exist? (1) a seasonal merchandise miss that the Management team has acknowledged and worked on correcting, coupled with poor weather conditions; and (2) the herds current infatuated with fast fashion retailers and high teen unemployment (~20%). On the other hand, we

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