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.
Brand Strength to Drive American Eagle (AEO) in Q2 Earnings
Read MoreHide Full Article
American Eagle Outfitters, Inc. (AEO - Free Report) is expected to register top and bottom-line growth when it reports second-quarter fiscal 2023 results on Sep 6. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.19 billion, which indicates a decline of 0.9% from the year-ago reported figure.
The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 15 cents per share, suggesting 275% growth from the year-ago quarter's reported number. The Zacks Consensus Estimate for the to-be-reported quarter's earnings has moved up 25% in the past 30 days.
The company’s earnings were in line with the Zacks Consensus Estimate in the last reported quarter. It has an earnings surprise of 9.2% for the trailing four quarters, on average.
American Eagle Outfitters, Inc. Price and EPS Surprise
American Eagle has been well-poised to benefit from brand strength, innovation efforts, solid omni-channel capabilities and focus on efficient inventory management. The company is likely to have gained from favorable demand for its leading brands and expansionary efforts into new markets. Its Real Power Real Growth value creation plan bodes well.
The company has been gaining from the robust Aerie brand, driven by strength across intimates, leggings, apparel, and beauty and accessories, as well as OFFLINE activewear. The brand has been on an extraordinary growth trajectory, as evidenced by its remarkable first-quarter fiscal 2023 performance. Also, a solid online show is expected to have aided the fiscal second-quarter performance.
AEO has been on track with the Real Power, Real Growth value-creation plan. Its second-quarter fiscal 2023 performance is expected to have benefited from the significant progress on its Real Power Real Growth value creation plan. The plan has been driving profitability through real estate and inventory-optimization efforts, omni-channel and customer focus, and investments to improve the supply chain. The company’s efforts under the plan have been aiding the recovery of the American Eagle brand.
American Eagle’s gross margin is anticipated to have gained from lower transportation, compensation and delivery costs in second-quarter fiscal 2023. However, the gross margin is likely to have reflected the continued impacts of increased markdowns and higher rent. This is expected to have partly weighed on the gross margin to some extent.
On the last reported quarter’s earnings call, management anticipated revenues to decline in the low-single digits on a year-over-year basis for the fiscal second quarter. The operating income is likely to be $25-$35 million.
We expect the gross margin to expand 390 basis points (bps) year over year to 34.8% in the fiscal second quarter, suggesting a decline in the cost of sales due to lower freight expenses. Our model predicts an adjusted operating margin of 2.9%, up 170 bps from the year-ago quarter’s actual. In dollar terms, adjusted operating income is likely to increase 140.4% year over year.
Moreover, the company has been witnessing elevated corporate compensation and advertising costs, which are expected to have continued in the fiscal second quarter, resulting in higher SG&A expenses. Rising costs and expenses, if not controlled, can partly weigh on its margins and profitability in the to-be-reported quarter.
On the last reported quarter’s earnings call, management anticipated SG&A to increase in the low to mid-single digits in the fiscal second quarter. We expect SG&A expenses to increase 3.2% year over year to $317.8 million in the fiscal second quarter. Meanwhile, SG&A expenses, as a percentage of sales, are expected to increase 160 bps.
What the Zacks Model Unveils
Our proven model conclusively predicts 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 has a Zacks Rank #2 and an Earnings ESP of +8.52%.
Other Stocks With Favorable Combination
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this season:
Darden Restaurants (DRI - Free Report) currently has an Earnings ESP of +0.72% and a Zacks Rank #2. The company is expected to register top and bottom-line growth when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly earnings per share of $1.72 suggests growth of 10.3% from the year-ago quarter’s reported figure.
Darden Restaurants’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $2.7 billion, indicating an increase of 10.5% from the figure reported in the year-ago quarter.
Costco Wholesale (COST - Free Report) currently has an Earnings ESP of +0.99% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The consensus mark for COST’s quarterly revenues is pegged at $78.9 billion, which suggests a rise of 9.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Costco Wholesale’s earnings has moved down by a penny to $4.72 per share in the past 30 days. The consensus estimate indicates 12.4% growth from the year-ago quarter’s reported figure.
Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +1.29% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports first-quarter fiscal 2024 numbers. The consensus mark for CASY’s quarterly earnings has moved down 0.9% in the past seven days to $3.36 per share. The consensus estimate suggests a decline of 17.9% from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Casey's quarterly revenues is pegged at $3.9 billion, which suggests a decline of 13.5% from the figure reported in the prior-year quarter.
Image: Bigstock
Brand Strength to Drive American Eagle (AEO) in Q2 Earnings
American Eagle Outfitters, Inc. (AEO - Free Report) is expected to register top and bottom-line growth when it reports second-quarter fiscal 2023 results on Sep 6. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.19 billion, which indicates a decline of 0.9% from the year-ago reported figure.
The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 15 cents per share, suggesting 275% growth from the year-ago quarter's reported number. The Zacks Consensus Estimate for the to-be-reported quarter's earnings has moved up 25% in the past 30 days.
The company’s earnings were in line with the Zacks Consensus Estimate in the last reported quarter. It has an earnings surprise of 9.2% for the trailing four quarters, on average.
American Eagle Outfitters, Inc. Price and EPS Surprise
American Eagle Outfitters, Inc. price-eps-surprise | American Eagle Outfitters, Inc. Quote
Key Factors to Note
American Eagle has been well-poised to benefit from brand strength, innovation efforts, solid omni-channel capabilities and focus on efficient inventory management. The company is likely to have gained from favorable demand for its leading brands and expansionary efforts into new markets. Its Real Power Real Growth value creation plan bodes well.
The company has been gaining from the robust Aerie brand, driven by strength across intimates, leggings, apparel, and beauty and accessories, as well as OFFLINE activewear. The brand has been on an extraordinary growth trajectory, as evidenced by its remarkable first-quarter fiscal 2023 performance. Also, a solid online show is expected to have aided the fiscal second-quarter performance.
AEO has been on track with the Real Power, Real Growth value-creation plan. Its second-quarter fiscal 2023 performance is expected to have benefited from the significant progress on its Real Power Real Growth value creation plan. The plan has been driving profitability through real estate and inventory-optimization efforts, omni-channel and customer focus, and investments to improve the supply chain. The company’s efforts under the plan have been aiding the recovery of the American Eagle brand.
American Eagle’s gross margin is anticipated to have gained from lower transportation, compensation and delivery costs in second-quarter fiscal 2023. However, the gross margin is likely to have reflected the continued impacts of increased markdowns and higher rent. This is expected to have partly weighed on the gross margin to some extent.
On the last reported quarter’s earnings call, management anticipated revenues to decline in the low-single digits on a year-over-year basis for the fiscal second quarter. The operating income is likely to be $25-$35 million.
We expect the gross margin to expand 390 basis points (bps) year over year to 34.8% in the fiscal second quarter, suggesting a decline in the cost of sales due to lower freight expenses. Our model predicts an adjusted operating margin of 2.9%, up 170 bps from the year-ago quarter’s actual. In dollar terms, adjusted operating income is likely to increase 140.4% year over year.
Moreover, the company has been witnessing elevated corporate compensation and advertising costs, which are expected to have continued in the fiscal second quarter, resulting in higher SG&A expenses. Rising costs and expenses, if not controlled, can partly weigh on its margins and profitability in the to-be-reported quarter.
On the last reported quarter’s earnings call, management anticipated SG&A to increase in the low to mid-single digits in the fiscal second quarter. We expect SG&A expenses to increase 3.2% year over year to $317.8 million in the fiscal second quarter. Meanwhile, SG&A expenses, as a percentage of sales, are expected to increase 160 bps.
What the Zacks Model Unveils
Our proven model conclusively predicts 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 has a Zacks Rank #2 and an Earnings ESP of +8.52%.
Other Stocks With Favorable Combination
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this season:
Darden Restaurants (DRI - Free Report) currently has an Earnings ESP of +0.72% and a Zacks Rank #2. The company is expected to register top and bottom-line growth when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly earnings per share of $1.72 suggests growth of 10.3% from the year-ago quarter’s reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Darden Restaurants’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $2.7 billion, indicating an increase of 10.5% from the figure reported in the year-ago quarter.
Costco Wholesale (COST - Free Report) currently has an Earnings ESP of +0.99% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The consensus mark for COST’s quarterly revenues is pegged at $78.9 billion, which suggests a rise of 9.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Costco Wholesale’s earnings has moved down by a penny to $4.72 per share in the past 30 days. The consensus estimate indicates 12.4% growth from the year-ago quarter’s reported figure.
Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +1.29% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports first-quarter fiscal 2024 numbers. The consensus mark for CASY’s quarterly earnings has moved down 0.9% in the past seven days to $3.36 per share. The consensus estimate suggests a decline of 17.9% from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Casey's quarterly revenues is pegged at $3.9 billion, which suggests a decline of 13.5% from the figure reported in the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.