American Eagle Outfitters Inc.
) is scheduled to release its third-quarter 2012 financial
results on Wednesday, November 28, 2012.
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The Zacks Consensus Estimate for third quarter earnings stands at
39 cents a share, which reflects an increase of 43.3% from the
comparable prior-year quarter earnings. The Zacks Consensus
Estimate lies between a low of 37 cents and a high of 41 cents.
Further, revenue as per Zacks Consensus Estimate is pegged at
Looking Back at the Last Quarter
American Eagle Outfitters Inc. reported adjusted earnings of 21
cents per share for the second quarter of fiscal 2012, which
climbed nearly 62% from the prior-year quarter's adjusted
earnings of 13 cents. The year-over-year growth in earnings was
driven by a double-digit augmentation in the top line, coupled
with lower input and operating expenses. Moreover, quarterly
adjusted earnings were in line with the Zacks Consensus Estimate.
During the quarter, American Eagle's adjusted net sales went up
11% year over year to $739.7 million, while beating the Zacks
Consensus Estimate of $738 million. Growth in revenue was driven
by a 9% increase in comparable store sales compared with a rise
of 1% registered in the year-ago quarter. The company's AE Brand,
aerie and AEO Direct segments reported growth of 7%, 13% and 28%,
respectively, in comparable store sales.
For the third quarter of fiscal 2012, American Eagle expects to
earn in the range of 37 - 38 cents per share compared with 30
cents in the prior-year period. In addition, the company is
anticipating a decline in the range of the mid-single-digits in
inventory per square foot.
Looking into fiscal 2012, the company raised its earnings
guidance range to $1.33 - $1.36 per share from $1.16 - $1.22
forecasted earlier. The improved guidance range is based on the
company's expectation of mid-single-digit and low-sing-digit
growth in comparable store sales for the third and fourth
quarters of fiscal 2012.
Agreement of Estimate Revisions
For the to-be-reported quarter, 1 out of 22 estimates was raised
while none moved in the opposite direction over the last 30 days.
In the last 7 days, there were no estimate movements in either
For fiscal 2012, 1 of the 22 estimates moved upwards and none
were lowered in the last 30 days. During the last 7 days, the
story remained similar to the upcoming quarter, with no estimate
revisions in either direction.
Magnitude of the Estimate Revisions
For the third-quarter of 2012, the Zacks Consensus Estimate for
earnings remained stable at 39 cents a share in the last 30 days
as well as 7 days. Similarly, the Zacks Consensus Estimate for
fiscal 2012 also remained intact at $1.37 per share in the last
30 days and 7 days.
Earnings Surprise History
The earnings surprise history for American Eagle remains positive
with the company meeting the Zacks Consensus Estimate in three of
the trailing four quarters and beating in the remaining quarter.
The average of the surprise history stands at positive 2.94% over
the last four quarters. Looking at the previous performances, we
believe the company will likely meet or beat the Zacks Consensus
Estimate in the upcoming quarters.
American Eagle currently remains focused on increasing
merchandise assortments, adding more compelling brands, managing
inventory level much diligently and augmenting e-commerce
business. Further, in order to emphasize more on the core
business while generating the best possible return for
shareholders, the company has decided to exit its children's
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 augment its top-line
performance as well as enhance the gross margin.
Moreover, we believe that American Eagle's cost-saving
initiatives and long-term growth strategy will not only provide
financial flexibility, but will help drive value proposition. In
an effort to boost its bottom line, the company is relentlessly
focusing on initiatives to cut down costs through supply chain
efficiencies and updated product allocation system.
American Eagle, which competes with
Abercrombie & Fitch Co.
), carries a Zacks #2 Rank, translating into a short-term Buy
rating for the next 1-3 months. Moreover, we maintain our
long-term 'Outperform' recommendation on the stock.