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American Eagle (AEO) Q2 Earnings: Solid Streak to Continue?
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American Eagle Outfitters, Inc. (AEO - Free Report) is expected to release second-quarter fiscal 2016 results on Aug 17. Last quarter, the company had delivered a positive earnings surprise of 22.2%. In fact, the bottom line has outperformed the Zacks Consensus Estimate for six straight quarters now, with a trailing four-quarter average of 12.3%. Let’s see how things are shaping up for this announcement.
American Eagle has been gaining from its growth strategies, including merchandise-related initiatives as well as actions taken to improve operational performance. Moreover, the company has been strengthening its global presence for some time now after witnessing strong profitability at its overseas licensed stores, with little capital requirements. These factors, along with a splendid earnings history keep the company in good shape for its upcoming earnings release.
However, American Eagle is up against a challenging apparel industry, which is plagued by intense competition and a fall in mall traffic. Additionally, high dependence on external suppliers and macroeconomic headwinds remain deterrents for the upcoming results. Thus, we would prefer to wait and see if American Eagle can counter these headwinds and keep its solid streak alive in the quarter to be reported.
The company had earlier projected comparable-store sales growth in a low single-digit rate for the second quarter, with earnings per share in the band of 20−21 cents per share.
Earnings Whispers
Our proven model does not conclusively show that American Eagle is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for American Eagle is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 21 cents.
Zacks Rank: American Eagle’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
L Brands, Inc. (LB - Free Report) , scheduled to report earnings on Aug 17, currently has an Earnings ESP of +1.70% and a Zacks Rank #3 (Hold).
Lowe's Companies, Inc. (LOW - Free Report) , scheduled to report earnings on Aug 17, currently has an Earnings ESP of +2.13% and a Zacks Rank #2.
The Gap Inc. , slated to report earnings on Aug 18, currently has an Earnings ESP of +6.38% and a Zacks Rank #3.
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American Eagle (AEO) Q2 Earnings: Solid Streak to Continue?
American Eagle Outfitters, Inc. (AEO - Free Report) is expected to release second-quarter fiscal 2016 results on Aug 17. Last quarter, the company had delivered a positive earnings surprise of 22.2%. In fact, the bottom line has outperformed the Zacks Consensus Estimate for six straight quarters now, with a trailing four-quarter average of 12.3%. Let’s see how things are shaping up for this announcement.
AMER EAGLE OUTF Price and EPS Surprise
AMER EAGLE OUTF Price and EPS Surprise | AMER EAGLE OUTF Quote
Factors Influencing this Quarter
American Eagle has been gaining from its growth strategies, including merchandise-related initiatives as well as actions taken to improve operational performance. Moreover, the company has been strengthening its global presence for some time now after witnessing strong profitability at its overseas licensed stores, with little capital requirements. These factors, along with a splendid earnings history keep the company in good shape for its upcoming earnings release.
However, American Eagle is up against a challenging apparel industry, which is plagued by intense competition and a fall in mall traffic. Additionally, high dependence on external suppliers and macroeconomic headwinds remain deterrents for the upcoming results. Thus, we would prefer to wait and see if American Eagle can counter these headwinds and keep its solid streak alive in the quarter to be reported.
The company had earlier projected comparable-store sales growth in a low single-digit rate for the second quarter, with earnings per share in the band of 20−21 cents per share.
Earnings Whispers
Our proven model does not conclusively show that American Eagle is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for American Eagle is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 21 cents.
Zacks Rank: American Eagle’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
L Brands, Inc. (LB - Free Report) , scheduled to report earnings on Aug 17, currently has an Earnings ESP of +1.70% and a Zacks Rank #3 (Hold).
Lowe's Companies, Inc. (LOW - Free Report) , scheduled to report earnings on Aug 17, currently has an Earnings ESP of +2.13% and a Zacks Rank #2.
The Gap Inc. , slated to report earnings on Aug 18, currently has an Earnings ESP of +6.38% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>