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Why American Eagle Outfitters (AEO) Dipped More Than Broader Market Today

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American Eagle Outfitters (AEO - Free Report) closed the most recent trading day at $17.52, moving -2.1% from the previous trading session. This move lagged the S&P 500's daily loss of 0.22%. On the other hand, the Dow registered a loss of 0.66%, and the technology-centric Nasdaq decreased by 0.22%.

The teen clothing retailer's stock has climbed by 3.89% in the past month, exceeding the Retail-Wholesale sector's loss of 3.19% and the S&P 500's gain of 1.4%.

The investment community will be closely monitoring the performance of American Eagle Outfitters in its forthcoming earnings report. On that day, American Eagle Outfitters is projected to report earnings of $0.49 per share, which would represent a year-over-year decline of 7.55%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.46 billion, up 6.83% from the year-ago period.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $2.24 per share and revenue of $5.86 billion. These totals would mark changes of +49.33% and +6.63%, respectively, from last year.

Any recent changes to analyst estimates for American Eagle Outfitters should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

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 last 30 days, the Zacks Consensus EPS estimate has moved 26.93% higher. American Eagle Outfitters is currently sporting a Zacks Rank of #3 (Hold).

In the context of valuation, American Eagle Outfitters is at present trading with a Forward P/E ratio of 8. This signifies a discount in comparison to the average Forward P/E of 14.2 for its industry.

We can additionally observe that AEO currently boasts a PEG ratio of 4.08. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Apparel and Shoes was holding an average PEG ratio of 1.24 at yesterday's closing price.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. Currently, this industry holds a Zacks Industry Rank of 88, positioning it in the top 36% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

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