There have been many articles stating that the teen retailers are prime targets for LBOs. I do believe this to be true considering the balance sheets and valuations, but I believe that Abercrombie & Fitch (ANF) would be the most attractive LBO candidate of the teen retailers from a strategic perspective. Though Aeropostale (ARO) is attractive because of its smaller size, I believe that its company-specific issues and issues related to fashion may end up being too much to get a private equity firm interested. American Eagle (AEO) is on the soundest footing from an operations perspective, has less cost levers to pull, and trades at the highest EBITDA valuation.
On the other hand,...
Only subscribers can access this article, which is part of the PRO research library covering 3,580 different stocks.
Growing numbers of fund managers and other investment professionals subscribe to Seeking Alpha PRO for equity research that is unavailable elsewhere, so they can: