Can American Eagle Outfitters (NYSE: AEO) Continue its Winning Streak?
American Eagle Outfitters (AEO) Consumer Discretionary – Specialty Retail | Reports August 17, Before Market Opens
Key Takeaways
- The Estimize consensus is calling for earnings per share of 22 cents on $820.03million in revenue, 1 cent higher than Wall Street on the bottom line and $3 million on the top
- The American Eagle portfolio of established brands should continue to reach its target customers, led by its Aerie Brand
- Deutsche Bank upgraded the stock to buy from hold ahead of its report, citing strength in its women’s brand and upside in Aerie’s brand, amongst other factors
- What are you expecting for AEO? Get your estimate in here!
Teen retailers have bounced back in recent quarters after years slowing growth. American Eagle has been at the forefront of the recovery with steadily improving earnings and sales growth. Last quarter the company topped expectations by 4 cents on the bottom line and nearly $20 million on the top. Early signs point to another strong report from American Eagle early Wednesday morning.
Analysts at Estimize are calling for earnings per share of 22 cents, 27% higher than the same period last year. That estimate has increased 4% since American Eagle’s most recent report in May. Revenue is anticipated 2% higher to $820.03 million, making 7 straight quarters of positive gains. Typically the market doesn’t react to earnings, good or bad. On average shares have been flat through earnings only to increase by 1% in the month following a report. 
After a tough few years, American Eagle has finally started to turn things around. Last quarter saw strong growth across its key brands. Consolidated comparable sales grew 6% supported by a 36% increase in its Aerie brand and 4% growth in core American Eagle products. The American Eagle portfolio of established brands should continue to reach its target customers, led by its Aerie Brand. Additionally, the company has widened its global footprint after seeing strong profitability in international markets.
The biggest concerns this quarter are likely to come from stiff competition and stronger dollar. Names like Gap and Abercrombie are two of its most direct competitors with online retailers and fast fashion brands indirectly stealing away sales. Meanwhile, the strong dollar will likely eat away at overseas revenue like it has for many other retailers
Just ahead of its report, Deutsche Bank upgraded the stock to buy from hold citing strength in women’s merchandising, upside at Aerie, improvement in men’s segment and online acceleration.
Do you think AEO can beat estimates? There is still time to get your estimate in here!
Photo Credit: Mike Mozart
