American Eagle Ripe for LBO With Cash Flow Discount: Real M&A

For the discriminating private-equity shopper, there may be no better bargain in retail than American Eagle Outfitters Inc.

American Eagle, known for jeans and preppy shirts, trades at 10.2 times free cash flow, the cheapest among U.S. retailers that sell clothes to teenagers, and holds the most cash relative to its market value, according to data compiled by Bloomberg. While the Pittsburgh-based company has been reducing its inventory, the company still took longer to sell its merchandise last year than any period since 1995, the data show.