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Here's Why American Eagle Outfitters (AEO) Fell More Than Broader Market

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In the latest trading session, American Eagle Outfitters (AEO - Free Report) closed at $25.44, marking a -1.43% move from the previous day. The stock fell short of the S&P 500, which registered a loss of 0.06% for the day. Meanwhile, the Dow lost 0.17%, and the Nasdaq, a tech-heavy index, lost 0.06%.

The teen clothing retailer's shares have seen a decrease of 6.28% over the last month, not keeping up with the Retail-Wholesale sector's gain of 5.39% and the S&P 500's gain of 1.99%.

Analysts and investors alike will be keeping a close eye on the performance of American Eagle Outfitters in its upcoming earnings disclosure. On that day, American Eagle Outfitters is projected to report earnings of $0.71 per share, which would represent year-over-year growth of 31.48%. Meanwhile, the latest consensus estimate predicts the revenue to be $1.74 billion, indicating a 8.35% increase compared to the same quarter of the previous year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $1.38 per share and a revenue of $5.47 billion, representing changes of -20.69% and +2.68%, respectively, from the prior year.

Any recent changes to analyst estimates for American Eagle Outfitters should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 3.5% higher. American Eagle Outfitters currently has a Zacks Rank of #1 (Strong Buy).

Investors should also note American Eagle Outfitters's current valuation metrics, including its Forward P/E ratio of 18.73. This indicates a discount in contrast to its industry's Forward P/E of 19.37.

We can additionally observe that AEO currently boasts a PEG ratio of 8.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Apparel and Shoes industry had an average PEG ratio of 2.06 as trading concluded yesterday.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 44, putting it in the top 18% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AEO in the coming trading sessions, be sure to utilize Zacks.com.


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