Why is American Eagle's Stock Tumbling? - Analyst Blog

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American Eagle Outfitters Inc. ( AEO ) reported disappointing net sales and comparable store sales (comps) results for the holiday season. The retailer's sales and traffic remained soft during Christmas owing to stiff competition from other retailers with better promotional offers. Battered by holiday results, the company also cut its earnings forecast for the fourth quarter of fiscal 2013.

Since the announcement of the dismal sales results, shares of this apparel and shoe retailer slumped 16.7% as of Jan 24, 2014. Alongside, the stock reached a 52-week low of $12.76.

This Pittsburgh, PA-based company delivered total sales of $882 million, down 2% from $904 million recorded last year. Comps also slipped 7% compared to a 5% year-over-year rise.

American Eagle now expects its fourth-quarter fiscal 2013 earnings to dovetail with the lower-end of previously provided guidance range of 26 cents to 30 cents a share. In sync with the company's guidance, the current Zacks Consensus Estimate for the fourth quarter witnessed a downtrend of 10.3% to 26 cents a share from 29 cents in the past 30 days.

American Eagle also posted disappointing third-quarter fiscal 2013 results in early December.  For the said quarter, the company reported a 53.7% year-over-year decline in earnings per share. Net sales recorded a 5.8% decline from the prior year. Revenues skidded mainly due to lower average unit retail and average dollar sale.

Moreover, the last traded price of this Zacks Rank #5 (Strong Sell) stock is 22.3% below the Zacks Consensus average analyst price target of $16.43. The company has long-term projected earnings per share (EPS) growth rate of 8.9%, relatively lower than the peer group average of 15.5% and it currently trades at a forward P/E of 17.5x, a 0.7% premium to the peer group average of 17.37x.

Not all stocks are performing as poorly as American Eagle. Other better-ranked stocks in the apparel and shoe sector include Finish Line Inc. ( FINL ), Abercrombie & Fitch Co. ( ANF ) and The Men's Wearhouse, Inc. ( MW ) all holding a Zacks Rank #2 (Buy).



AMER EAGLE OUTF (AEO): Free Stock Analysis Report

ABERCROMBIE (ANF): Free Stock Analysis Report

FINISH LINE-CLA (FINL): Free Stock Analysis Report

MENS WEARHOUSE (MW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AEO , ANF , EPS , FINL , MW

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