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Will Soft Store Traffic Mar American Eagle's (AEO) Q3 Earnings?

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American Eagle Outfitters, Inc. (AEO - Free Report) is likely to register top- and bottom-line decline when it reports third-quarter fiscal 2020 numbers on Nov 24, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $1,054 million, which indicates a decline of 1.2% from the year-ago quarter’s reported figure. The company had witnessed top-line decline of 15% in the last reported quarter.

The Zacks Consensus Estimate for quarterly earnings went up by a penny in the past 30 days and is currently pegged at 33 cents per share. The current Zacks Consensus Estimate indicates that the company is likely to swing back to profit following a loss in the last reported quarter. However, the consensus mark suggests a decline of 31.3% from earnings of 48 cents reported in the year-ago quarter.

Aspects That May Impact Q3 Metrics

Traffic trends across American Eagle’s brick-and-mortar stores, especially in malls, have been dismal. Store traffic trends have been gravely impacted by the coronavirus pandemic-led social distancing practices. Moreover, the company is undertaking store closures to rationalize its store fleet. These downsides are likely to have put pressure on the company’s top line during the quarter under review.

On its last earnings call, management highlighted that it is cautious about evolving pandemic-related challenges and its potential impact on the back-to-school season. Additionally, the impact of elevated shipping and distribution costs on margins cannot be ruled out.

Nevertheless, American Eagle is gaining from strong demand in its digital platform, as the ongoing coronavirus pandemic is forcing shoppers to shift to online purchasing, Consequently, the company has remained committed toward augmenting its digital capabilities. We expect that the addition of new customers and higher conversations rates are likely to have boosted online sales in the third quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for American Eagle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

American Eagle carries a Zacks Rank #3 and an Earnings ESP of -0.30%.

Stocks Poised to Beat Earnings Estimates

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.

Central Garden & Pet Company (CENT - Free Report) has an Earnings ESP of +57.14% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Signet Jewelers Limited (SIG - Free Report) has an Earnings ESP of +13.95% and a Zacks Rank #2, at present.

DICK’S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +16.18% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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