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Surging Earnings Estimates Signal Upside for American Eagle (AEO) Stock
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Investors might want to bet on American Eagle Outfitters (AEO - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this teen clothing retailer, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for American Eagle Outfitters, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.59 per share, which is a change of +9.3% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for American Eagle has increased 5.52% because one estimate has moved higher while one has gone lower.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $1.21 per share, representing a year-over-year change of -30.5%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for American Eagle. Over the past month, five estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 9.4%.
Favorable Zacks Rank
The promising estimate revisions have helped American Eagle earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
While strong estimate revisions for American Eagle have attracted decent investments and pushed the stock 41.3% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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Surging Earnings Estimates Signal Upside for American Eagle (AEO) Stock
Investors might want to bet on American Eagle Outfitters (AEO - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this teen clothing retailer, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for American Eagle Outfitters, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.59 per share, which is a change of +9.3% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for American Eagle has increased 5.52% because one estimate has moved higher while one has gone lower.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $1.21 per share, representing a year-over-year change of -30.5%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for American Eagle. Over the past month, five estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 9.4%.
Favorable Zacks Rank
The promising estimate revisions have helped American Eagle earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
While strong estimate revisions for American Eagle have attracted decent investments and pushed the stock 41.3% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.