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American Eagle Upped to Strong Buy on Robust Performance

On Dec 8, 2015, Zacks Investment Research upgraded American Eagle Outfitters, Inc. AEO to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The company recently posted solid bottom-line results for third-quarter fiscal 2015 that surpassed the Zacks Consensus Estimate and improved year over year. Results benefited from solid sales and earnings growth delivered by both the American Eagle and Aerie brands, across all networks.

Alongside, American Eagle’s strong earnings history is evident from the fact that it outpaced the Zacks Consensus Estimate in eight out of the past nine quarters, with an average beat of 16.7% over the trailing four quarters. Further, management provided a favorable guidance for the fourth quarter.

All these factors underscore the company’s solid future potential, triggering an uptrend in the Zacks Consensus Estimate. The Zacks Consensus Estimate went up 1.9% to $1.08 and nearly 1% to $1.15 for fiscal 2015 and fiscal 2016, respectively, over the past 7 days.

American Eagle has been focused on strengthening its product assortments by adding more compelling brands, managing inventory levels diligently and improving eCommerce business. Also, it has been undertaking initiatives to reduce costs through supply chain efficiencies and an updated product allocation system.

Apart from this, the company has been fortifying its global presence for some time now after recording strong profitability at its overseas licensed stores, with little capital requirements. Also, it is striving to develop its omni-channel platform to reach customers in every possible way. We believe that these efforts present the company with significant opportunity to expand its business and cater to the incredible global demand for its products.

These strategic initiatives, along with its robust fundamentals are expected to continue to drive American Eagle’s performance.

Stocks to Consider

Other well-ranked stocks in the same industry that look promising include Abercrombie & Fitch Co. ANF, with a Zacks Rank #1, and Foot Locker, Inc. FL and Express Inc. EXPR, each carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ABERCROMBIE (ANF): Free Stock Analysis Report
 
AMER EAGLE OUTF (AEO): Free Stock Analysis Report
 
FOOT LOCKER INC (FL): Free Stock Analysis Report
 
EXPRESS INC (EXPR): Free Stock Analysis Report
 
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Zacks Investment Research