Posted by Davy Bui on April 14th, 2008 in Stock Research
Email Davy

I recently finished my research on AEO this past week and while I don’t usually post reports or comment on companies in which I have yet to open a position, I wanted to point readers to this bearish post on Seeking Alpha.   Ellerd values AEO at $13 per share.

I will probably post the report some time later this month but I came to a valuation on AEO of $15 – $18 per share with a caveat that the upside may be higher but concerns that the company is growing stale and losing market share.  Few retailers stay cool forever.

Anyway, the SA post is worth reading if you follow the stock though some of the comments get bogged down over nitpicking the guy’s DCF model (this is the inherent flaw in financial modeling — your assumptions drive the results).