American Eagle Looks Promising: Are You Considering?

Is American Eagle Outfitters, Inc. AEO part of your portfolio? If not, then now could be the right time to add the stock as it looks very promising. Moreover, the underlying factors are capable of rallying it even further. The stock carries a Zacks Rank #2 (Buy) and has a long-term earnings growth rate of 12.1% with a VGM Score of “A”, which underlines its inherent strength.

So far in the year, the stock has advanced roughly 17.5%, and we believe there is still a great deal of momentum left in it still. This is evident from the upward revision in the Zacks Consensus Estimate, which reflects that analysts covering the stock remain buoyant about its future performance.

Hidden Catalysts

American Eagle remains focused on strengthening its product assortments by adding more compelling brands, managing inventory levels diligently and improving its eCommerce business. Moreover, it is committed to enhancing store sales by rationalizing the brick-and-mortar store fleet that includes closing underperforming stores.

Further, the company possesses strong fundamentals, given its rewards program and strategic store expansion plans. American Eagle has also been constantly undertaking initiatives to reduce costs through supply chain efficiencies and an updated product allocation system. These efforts are anticipated to help the company boost bottom-line growth.

American Eagle has been strengthening its global presence for some time now, after observing strong profitability at its overseas licensed stores with little capital requirements. In line with this strategy, the company has fortified its presence in South Korea, Singapore, Greece, Peru, Chile, Bahrain and Oman. Apart from this, American Eagle is striving to develop its omni-channel platform to reach customers in every possible way.

Positive Earnings Surprise History

American Eagle also appears alluring from the earnings perspective. This specialty retailer of casual apparel, accessories and footwear registered positive earnings surprises in each of the past seven quarters. In the trailing four quarters, the Pittsburgh, PA-based company outperformed the Zacks Consensus Estimate by an average of 9.3%, including a positive surprise of 9.5% delivered in the second-quarter fiscal 2016 results.

Results in the second quarter benefited from the company’s constant efforts to enhance brands via innovations, making technological advancements as well as its commitment toward enriching consumer experience. Results were also driven bty continued strength in its American Eagle and aerie brands.

The better-than-expected results triggered an uptrend in the Zacks Consensus Estimate as analysts raised their estimates. Analysts polled by Zacks are convinced about the stock’s upbeat performance in the future. Over the past 30 days, the Zacks Consensus Estimate of $1.31 and $1.42 for fiscal 2016 and fiscal 2017 saw a jump of 3 cents and 5 cents, respectively.

AMER EAGLE OUTF Price, Consensus and EPS Surprise

 

AMER EAGLE OUTF Price, Consensus and EPS Surprise | AMER EAGLE OUTF Quote

Bottom Line

From the above analysis it is obvious that American Eagle is a stock that deserves a place in your portfolio. Investors may also consider other favorably ranked stocks such as The Children's Place, Inc. PLCE, Nordstrom Inc. JWN and Urban Outfitters Inc. URBN, all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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AMER EAGLE OUTF (AEO): Free Stock Analysis Report
 
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