Big Move for AEO, but Do GAP’s Margins and Growth Give It the Edge?
Gap (GAP) offers superior revenue growth across key periods, better profitability, and relatively lower valuation vs American Eagle Outfitters (AEO), suggesting you may be better off investing in GAP
- GAP’s quarterly revenue growth was 2.2%, vs. AEO’s -4.7%.
- In addition, its Last 12 Months revenue growth came in at 1.1%, ahead of AEO’s -0.9%.
- GAP’s LTM margin is higher: 7.7% vs. AEO’s 5.7%.
AEO provides clothing, accessories, and personal care products through American Eagle, Aerie, and Todd Snyder stores across the US, Canada, Mexico, and Hong Kong. GAP offers apparel, accessories, and personal care products across multiple brands, including clothing, footwear, jewelry, and fragrances, with over 3,300 company-operated and franchise stores worldwide.
Valuation & Performance Overview
| AEO | GAP | Preferred | |
|---|---|---|---|
| Valuation | |||
| P/EBIT Ratio | 7.5 | 6.6 | GAP |
| Revenue Growth | |||
| Last Quarter | -4.7% | 2.2% | GAP |
| Last 12 Months | -0.9% | 1.1% | GAP |
| Last 3 Year Average | 1.6% | -2.1% | AEO |
| Operating Margins | |||
| Last 12 Months | 5.7% | 7.7% | GAP |
| Last 3 Year Average | 6.2% | 4.5% | AEO |
| Momentum | |||
| Last 3 Year Return | 5.4% | 118.1% | GAP |
Note: For “Last 3 Year Return” metric, preferred stock is one with higher returns unless the returns are too high (>300%) which creates risk of sell off.
See more revenue details: AEO Revenue Comparison | GAP Revenue Comparison
See more margin details: AEO Operating Income Comparison | GAP Operating Income Comparison
But do these numbers tell the full story? Read Buy or Sell GAP Stock to see if Gap’s edge holds up under the hood or if American Eagle Outfitters still has cards to play (see Buy or Sell AEO Stock).
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That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
Historical Market Performance
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total [1] | Avg | Best | |
|---|---|---|---|---|---|---|---|---|---|
| Returns | |||||||||
| AEO Return | 39% | 29% | -43% | 55% | -19% | -22% | -2% | ||
| GAP Return | 16% | -11% | -33% | 97% | 16% | -11% | 36% | ||
| S&P 500 Return | 16% | 27% | -19% | 24% | 23% | 10% | 98% | <=== | |
| Monthly Win Rates [3] | |||||||||
| AEO Win Rate | 50% | 58% | 25% | 67% | 33% | 29% | 44% | ||
| GAP Win Rate | 58% | 67% | 33% | 58% | 33% | 43% | 49% | ||
| S&P 500 Win Rate | 58% | 75% | 42% | 67% | 75% | 57% | 62% | <=== | |
| Max Drawdowns [4] | |||||||||
| AEO Max Drawdown | -54% | -1% | -61% | -27% | -21% | -43% | -34% | ||
| GAP Max Drawdown | -68% | -20% | -53% | -32% | -11% | -25% | -35% | ||
| S&P 500 Max Drawdown | -31% | -1% | -25% | -1% | -2% | -15% | -12% | <=== | |
[1] Cumulative total returns since the beginning of 2020
[2] 2025 data is for the year till date (YTD)
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
No matter how good the numbers, stock investment is never a smooth ride. There is a risk you must factor in. Read GAP Dip Buyer Analyses and AEO Dip Buyer Analyses to see how these stocks have fallen and recovered in the past.