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American Eagle Outfitters(AEO-N)

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What To Expect From American Eagle’s (AEO) Q3 Earnings

StockStory - Mon Nov 20, 2023

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Young adult apparel retailer American Eagle Outfitters (NYSE:AEO) will be reporting results tomorrow before market open. Here's what investors should know.

Last quarter American Eagle reported revenues of $1.20 billion, flat 0.2% year on year, in line with analyst expectations. It was an impressive quarter for the company, with EPS exceeding analysts' expectations, driven by outperformance in its Aerie segment. That and its increased revenue and operating income guidance for the full year ($260 million in operating income to $337.5 million at the midpoint) really stood out as positives.

Is American Eagle buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting American Eagle's revenue to grow 3.2% year on year to $1.28 billion, improving on the 2.6% year-over-year decline in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.48 per share.

American Eagle Total Revenue

The analysts covering the company have been growing increasingly bullish about the business heading into the earnings, with revenue estimates seeing four upwards revisions over the last thirty days.The company missed Wall St's revenue estimates twice over the last two years.

Looking at American Eagle's peers in the apparel and footwear retail segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. Gap's revenues decreased 6.7% year on year, beating analyst estimates by 4.4% and Children's Place reported revenue decline of 5.7% year on year, exceeding estimates by 3.4%. Gap traded up 8% on the results, Children's Place was down 11.7%.

Read our full analysis of Gap's results here and Children's Place's results here.

There has been positive sentiment among investors in the apparel and footwear retail segment, with the stocks up on average 8% over the last month. American Eagle is up 15.4% during the same time, and is heading into the earnings with analyst price target of $18, compared to share price of $19.75.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.