Earnings Preview: American Eagle - Analyst Blog
November 29 2011 - 10:23AM
Zacks
American Eagle Outfitters Inc. (AEO) is
scheduled to report its third-quarter 2011 financial results before
the opening bell on November 30, 2011. The current Zacks Consensus
Estimate for the quarter is earnings of 27 cents a share. For the
quarter under review, revenue is expected to be 819.0 million,
according to the Zacks Consensus Estimate.
Second-Quarter 2011 Synopsis
American Eagle’s earnings in the second quarter decreased to 10
cents per share from its year-ago earnings of 13 cents per share,
missing the Zacks Consensus Estimate of 11 cents a share. During
the quarter, American Eagle’s net sales went up 4.0% year over year
to $676.0 million, still below the Zacks Consensus Estimate of $770
million. Same-store sales came in flat for the quarter.
Zacks Consensus
The analyst covered by Zacks expects American Eagle to post
third-quarter 2011 earnings of 27 cents a share, which is lower
than earnings of 29 cents delivered in the prior-year quarter. The
current Zacks Consensus Estimate ranges between earnings of 26
cents and 28 cents a share.
For fiscal 2011, the Zacks Consensus Estimate stood at 90 cents
per share, lower than the previous fiscal earnings of $1.02. The
current Zacks estimate ranges between 81 cents and 95 cents a
share.
Agreement of Estimate
For the third quarter of fiscal 2011, out of 27 analysts
covering the stock, 18 analysts revised their estimates upward,
while none have revised in the opposite direction in the last 30
days. For full fiscal 2011, 20 analysts revised their estimates in
positive direction in the last 30 days.
In the last 7 days, no movement in estimates has been noticed in
either direction either for third-quarter 2011 or fiscal 2011.
The company has recorded a robust growth of 7% in October 2011
same-store sales (including AEO direct), which prompted management
to revise their earnings guidance range. In the third quarter of
fiscal 2011, the company now expects to earn in the range of 26
cents to 27 cents per share, up from its previous range of 22 cents
to 27 cents. Moreover, in fiscal 2011, the company is anticipating
earnings to be between 85 cents and 95 cents per share.
Considering the revision in guidance range, analysts have also
revised their estimates in upward direction.
Magnitude of Estimate Revisions
With heavy positive affect from earnings revisions by analysts
in the last 30 days, the Zacks Consensus Estimates for
third-quarter 2011 has increased by 3 cents to 27 cents per share
while for fiscal 2011 it increased by 4 cents to 90 cents per
share.
Surprise History
With respect to earnings surprises, American Eagle showed a
mixed trend in the last four quarters. The company has recorded
negative surprises two times in the trailing four quarters with a
low of negative 9.1% and a high of positive 2.3%. On an average,
the earnings surprise was a negative 4.6%.
Our View
We remain impressed with the company’s continued momentum in
denim along with improved merchandise assortments in the women’s
business segment, which will likely lead to a turnaround in its top
line as well as a rebound in gross margin.
The company operates in a highly fragmented specialty retail
sector and faces intense competition from other teenage-focused
retailers, such as Abercrombie & Fitch Co.
(ANF) and Gap Inc. (GPS).
We currently have a short-term Zacks #2 Rank (Buy) and a
long-term Neutral recommendation on the stock.
AMER EAGLE OUTF (AEO): Free Stock Analysis Report
ABERCROMBIE (ANF): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
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