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Will Strategic Efforts Aid American Eagle's (AEO) Q2 Earnings?
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American Eagle Outfitters Inc. (AEO - Free Report) is slated to release second-quarter fiscal 2018 results on Aug 29. Notably, the company delivered a positive earnings surprise in two of the trailing four quarters, with an average earnings beat of 4.5%.
The Zacks Consensus Estimate for second-quarter earnings is pegged at 31 cents, which moved up in the last seven days and reflects an improvement of 63.2% year over year. Management envisions adjusted earnings per share in the range of 27-29 cents compared with 19 cents earned in the prior-year quarter.
American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise
Let’s see how things are shaping up prior to the earnings announcement.
Factors Likely to Influence 2Q18
American Eagle has a robust comparable store sales (comps) trend, which marked 13th straight quarter of positive comps in first-quarter fiscal 2018. Comps growth was backed by solid gains from strategic initiatives, and ability to boost market share through strong brands and compelling merchandise. Both digital and in-store businesses also contributed to the impressive comps growth. In addition, the company has been witnessing improved transactions driven by an increase in traffic and conversion. Notably, Aerie brand delivered 14th straight quarter of double-digit sales growth, reflecting significant momentum. For the to-be-reported quarter, comps are projected to increase in mid-single digit.
This apart, American Eagle’s efforts to develop its omni-channel platform to reach customers in every possible way are commendable. The company is also enhancing its digital presence and investing in store fleet. Digital sales improved 20%, contributing about 29% to net sales in the last reported quarter. In fact, this was the company’s 13th straight quarter of double-digit e-commerce growth. Moreover, trends in brick-and-mortar stores are impressive. All these will contribute to the company’s top-line performance and boost profitability in the second quarter.
For the quarter to be reported, the Zacks Consensus Estimate for revenues stands at $942.4 million, reflecting 12% improvement year over year. Further, the company expects consistant improvement in gross margin and fixed costs leverage in the same period.
Year to date, shares of American Eagle have surged 54.2%, outperforming the industry’s 7.8% rally.
Although American Eagle's expansion plans and omni-channel development are expected to boost growth, high dependence on external suppliers and macroeconomic headwinds might weigh on its quarterly performance. Additionally, stiff competition in the retail space is worrisome.
A Look at the Zacks Model
Our proven model conclusively shows that American Eagle is likely to beat earnings estimates in the second quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
American Eagle has an Earnings ESP of +2.44% and a Zacks Rank #3, thus making us pretty confident of an earnings beat.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +78.57% and a Zacks Rank #3.
PVH Corporation (PVH - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Will Strategic Efforts Aid American Eagle's (AEO) Q2 Earnings?
American Eagle Outfitters Inc. (AEO - Free Report) is slated to release second-quarter fiscal 2018 results on Aug 29. Notably, the company delivered a positive earnings surprise in two of the trailing four quarters, with an average earnings beat of 4.5%.
The Zacks Consensus Estimate for second-quarter earnings is pegged at 31 cents, which moved up in the last seven days and reflects an improvement of 63.2% year over year. Management envisions adjusted earnings per share in the range of 27-29 cents compared with 19 cents earned in the prior-year quarter.
American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise
American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise | American Eagle Outfitters, Inc. Quote
Let’s see how things are shaping up prior to the earnings announcement.
Factors Likely to Influence 2Q18
American Eagle has a robust comparable store sales (comps) trend, which marked 13th straight quarter of positive comps in first-quarter fiscal 2018. Comps growth was backed by solid gains from strategic initiatives, and ability to boost market share through strong brands and compelling merchandise. Both digital and in-store businesses also contributed to the impressive comps growth. In addition, the company has been witnessing improved transactions driven by an increase in traffic and conversion. Notably, Aerie brand delivered 14th straight quarter of double-digit sales growth, reflecting significant momentum. For the to-be-reported quarter, comps are projected to increase in mid-single digit.
This apart, American Eagle’s efforts to develop its omni-channel platform to reach customers in every possible way are commendable. The company is also enhancing its digital presence and investing in store fleet. Digital sales improved 20%, contributing about 29% to net sales in the last reported quarter. In fact, this was the company’s 13th straight quarter of double-digit e-commerce growth. Moreover, trends in brick-and-mortar stores are impressive. All these will contribute to the company’s top-line performance and boost profitability in the second quarter.
For the quarter to be reported, the Zacks Consensus Estimate for revenues stands at $942.4 million, reflecting 12% improvement year over year. Further, the company expects consistant improvement in gross margin and fixed costs leverage in the same period.
Year to date, shares of American Eagle have surged 54.2%, outperforming the industry’s 7.8% rally.
Although American Eagle's expansion plans and omni-channel development are expected to boost growth, high dependence on external suppliers and macroeconomic headwinds might weigh on its quarterly performance. Additionally, stiff competition in the retail space is worrisome.
A Look at the Zacks Model
Our proven model conclusively shows that American Eagle is likely to beat earnings estimates in the second quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
American Eagle has an Earnings ESP of +2.44% and a Zacks Rank #3, thus making us pretty confident of an earnings beat.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Dollar Tree, Inc. (DLTR - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +78.57% and a Zacks Rank #3.
PVH Corporation (PVH - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>