We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Reasons Why American Eagle (AEO) Is a Great Growth Stock
Read MoreHide Full Article
Finding a great growth stock can be a tough task. Not only are there a wide range of choices, but the space can be extremely volatile and fraught with risk as well. But thanks to our new style score systemwe have been able to identify a few growth stocks which have incredible potential in the near term.
One such company that stands out in this regard is undoubtedly American Eagle Outfitters, Inc. (AEO - Free Report) . Not only does this company have a favorable growth score, but it is ranked as a buy too. And while there are numerous reasons why AEO is so attractive right now, we have highlighted three of the most important—and pertinent to growth investors—below:
Earnings Growth for AEO
Arguably nothing is more important than earnings growth as surging profit levels is what most investors are after. And for growth investors, earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) ahead for the company in question.
While AEO has put up a historical EPS growth rate of 21.44%, investors should really focus on the projected growth. Here, AEO is looking to grow at a rate of 20.4%, thoroughly crushing the industry average which calls for EPS growth of just 5.5%in comparison.
Cash Flow Growth for AEO
Cash is the lifeblood of any business, but especially so for growth oriented companies. A positive figure here indicates that cash is flowing into the business (obviously a good thing), while a negative reading here means that net cash is exiting the company.
Right now, AEO’s current cash flow growth is an impressive 37.0%, a level that is far higher than many of its peers, and the industry average. In fact, the industry average sees negative cash flow growth of just 2.8% in comparison, suggesting that AEO is a better pick from a cash flow look.
AEO Earnings Estimate Revisions Moving in the Right Direction
If the metrics outlined above weren’t enough investors should also consider the positive trends that we are seeing on the analyst estimate revision front. Analysts have been raising their estimates for American Eagle lately, and now the earnings picture is looking a bit more favorable for the company.
Over the past 60 days, 11 EPS estimates have been revised higher compared to none lower, at least for the current year time frame. And the magnitude of these revisions has also been impressive, as the consensus estimate for the full year has surged from $1.27 per share to $1.31 per share today.
Bottom Line
For the reasons outlined above, investors shouldn’t be surprised to note that American Eaglehas earned itself a growth score of ‘A’ as well as a Zacks Rank #2 (Buy). This means that we believe American Eagle stock is a potential outperformer that is an impressive choice for growth investors, making it a security that you need to keep on your radar in the near term.
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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Reasons Why American Eagle (AEO) Is a Great Growth Stock
Finding a great growth stock can be a tough task. Not only are there a wide range of choices, but the space can be extremely volatile and fraught with risk as well. But thanks to our new style score systemwe have been able to identify a few growth stocks which have incredible potential in the near term.
One such company that stands out in this regard is undoubtedly American Eagle Outfitters, Inc. (AEO - Free Report) . Not only does this company have a favorable growth score, but it is ranked as a buy too. And while there are numerous reasons why AEO is so attractive right now, we have highlighted three of the most important—and pertinent to growth investors—below:
Earnings Growth for AEO
Arguably nothing is more important than earnings growth as surging profit levels is what most investors are after. And for growth investors, earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) ahead for the company in question.
While AEO has put up a historical EPS growth rate of 21.44%, investors should really focus on the projected growth. Here, AEO is looking to grow at a rate of 20.4%, thoroughly crushing the industry average which calls for EPS growth of just 5.5%in comparison.
Cash Flow Growth for AEO
Cash is the lifeblood of any business, but especially so for growth oriented companies. A positive figure here indicates that cash is flowing into the business (obviously a good thing), while a negative reading here means that net cash is exiting the company.
Right now, AEO’s current cash flow growth is an impressive 37.0%, a level that is far higher than many of its peers, and the industry average. In fact, the industry average sees negative cash flow growth of just 2.8% in comparison, suggesting that AEO is a better pick from a cash flow look.
AEO Earnings Estimate Revisions Moving in the Right Direction
If the metrics outlined above weren’t enough investors should also consider the positive trends that we are seeing on the analyst estimate revision front. Analysts have been raising their estimates for American Eagle lately, and now the earnings picture is looking a bit more favorable for the company.
AMER EAGLE OUTF Price and Consensus
AMER EAGLE OUTF Price and Consensus | AMER EAGLE OUTF Quote
Over the past 60 days, 11 EPS estimates have been revised higher compared to none lower, at least for the current year time frame. And the magnitude of these revisions has also been impressive, as the consensus estimate for the full year has surged from $1.27 per share to $1.31 per share today.
Bottom Line
For the reasons outlined above, investors shouldn’t be surprised to note that American Eaglehas earned itself a growth score of ‘A’ as well as a Zacks Rank #2 (Buy). This means that we believe American Eagle stock is a potential outperformer that is an impressive choice for growth investors, making it a security that you need to keep on your radar in the near term.
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 >>