American Eagle (NYSE:AEO), a clothing retailer that's primarily mall-facing in nature, recently offered up its earnings report for the quarter. The report featured narrow wins all around, though, despite this, the company lost ground in premarket trading. A surge in this morning's trading briefly brought the company into the green for the day, but another slip put it back under yesterday's close as of this writing. Despite this, however, financial analysts remain about as optimistic now as they did even two years ago.
American Eagle Earnings Report Flies, But Not That High
A win is a win, so the American Eagle earnings report proves. The company turned in earnings of $0.48 per share on an adjusted basis, which compares reasonably well against the $0.46 expected, and also against the $0.45 expected by the Zacks consensus. It also represents double what the company posted for the first quarter of 2019, which was $0.24 per share.
Revenue also posted a beat, as the company brought in $1.03 billion against the $1.02 billion expected. A year prior, the company posted a loss of $257.2 million, so it's a win not only against current expectations but also against past performance.
The American Eagle brand remains the primary driver of earnings for the company, with the brand up slightly from pre-pandemic levels to pull in $728 million for the company. However, the leader in growth for the company is American Eagle's Aerie sub-brand, which gained 89% over the last two years and now pulls in $297 million for the company.
Further, the company cited stimulus checks as another major source of gain, with the company able to cut back on promotions and markdowns due to people sufficiently interested in paying retail prices. American Eagle's chief creative officer, and president of Aerie, Jen Foyle, also noted that the company is getting faster with supplying customers according to trends. For instance, the increasing popularity of both high-rise pants and wide-leg pants, is a point that American Eagle has already capitalized on. Further, the company notes that it's improving its ability to suggest pieces via store mannequins and online shopping in order to complete an entire look. Foyle noted how important it was to '...just focus on really getting the outfits [right] and completing the look.”
The company is also somewhat in flux right now; for the first quarter of the fiscal year, the company has opened four new American Eagle locations and six Aerie stand-alone operations. However, it's also closed 14 American Eagle shops and one Aerie stand-alone location. The company also remodeled and refurbished three stores during that same time.
How Do Financial Analysts Rate AEO Stock?
While the American Eagle earnings report didn't produce much impact by itself, financial analysts are still extremely upbeat about the company, our latest research notes. Based on their projections, the American Eagle stock forecast should be looking quite bright, as the company is not only currently rated a consensus “buy”, but has held that rating for the last two years.
A year ago, the company had 12 “buy” ratings and five “hold” ratings. Six months ago, that shifted to 12 “buy” ratings and six “hold” ratings. Today, the ratio remains the same as it did six months ago, with 10 “buy” ratings and five “hold” ratings, making the overall picture about as bullish now as it was then.
There's a fairly broad range for American Eagle price targets, though, with the average of $32.93 set between a high of $42 and a low of $15. With American Eagle stock currently trading at $34.80, there's some substantial downside potential as the company is approaching the 52-week high of $38.28.
Recent moves have been quite positive; today alone, three analysts raised their price targets. Telsey Advisory Group upped its target from $35 to $38, and B. Riley boosted its target from $40 to $41. However, that new high came just today from Jefferies Financial Group, which upgraded from $39 to $42. April was also a positive month overall, as six out of seven analysts raised their price targets in that time. As for the seventh, Royal Bank of Canada had only initiated coverage that month.
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