Mall-Based Apparel Retailers with Sell Ratings Because of Fundamentals
Traditional shopping malls and the retailers that operate in them have been struggling for a number of years as consumers have shifted their shopping preferences. This shift was going on well before the pandemic hit and now it appears the health crisis has only made things worse. Among the companies that are struggling are two apparel retailers that caught my eye because they are overbought on their daily charts—American Eagle Outfitters (AEO) and Gap, Inc. (GPS). American Eagle is also overbought on its weekly chart.
After looking at the charts for these two stocks, I started doing more research to see what other indicators showed. Both companies are pretty weak on the fundamental side with American Eagle getting negative marks in four categories and it doesn’t have any positive marks on the fundamental side. Tickeron’s AI based rating system ranks the stock as a “sell”. The company gets poor marks in its Outlook Rating, SMR Rating, P/E Growth Rating, and Seasonality Score.
Gap has two negative scores and three positive scores, but one of the areas with a negative mark is the SMR rating. I find the SMR rating especially valuable in my evaluations. The other area where the company scores poorly is in the Profit vs. Risk Rating.
I mentioned earlier that the stocks were overbought on their daily charts and that is based on the daily stochastic indicators. Both stocks have been in overbought territory for three days. Both stocks have received bearish signals from their RSI indicators recently and Gap received a bearish signal from the Aroon Indicator a few weeks back. American Eagle received a bearish signal from its Bollinger Bands last week.
Both American Eagle and Gap are expected to report fourth quarter earnings during the first week of March. American Eagle’s earnings are expected to come in flat compared to last year and up a penny from the third quarter. Gap’s earnings are expected to drop sharply compared to last year. The company reported EPS of $0.58 in Q4 2019 and the consensus estimate for Q4 2020 is $0.17. Gap earned $0.25 per share in Q3 2020.
A complete comparison and the exact ratings numbers appear below.
AEO's RSI Oscillator recovers from oversold territory
The RSI Oscillator for AEO moved out of oversold territory on October 13, 2025. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 27 similar instances when the indicator left oversold territory. In of the 27 cases the stock moved higher. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 21, 2025. You may want to consider a long position or call options on AEO as a result. In of 86 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for AEO just turned positive on October 23, 2025. Looking at past instances where AEO's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .
AEO moved above its 50-day moving average on October 23, 2025 date and that indicates a change from a downward trend to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AEO advanced for three days, in of 313 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.
The 10-day moving average for AEO crossed bearishly below the 50-day moving average on October 16, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 11 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AEO declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
AEO broke above its upper Bollinger Band on October 23, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for AEO entered a downward trend on October 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.817) is normal, around the industry mean (6.521). P/E Ratio (16.245) is within average values for comparable stocks, (32.164). AEO's Projected Growth (PEG Ratio) (0.000) is slightly lower than the industry average of (2.363). Dividend Yield (0.030) settles around the average of (0.029) among similar stocks. P/S Ratio (0.582) is also within normal values, averaging (5.328).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. AEO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. AEO’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 78, placing this stock worse than average.
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General Information
an operator of specialty retail stores
Industry ApparelFootwearRetail
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