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American Eagle Outfitters(AEO-N)

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American Eagle Earnings: What To Look For From AEO

StockStory - Tue Sep 5, 5:25AM CDT

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Young adult apparel retailer American Eagle Outfitters (NYSE:AEO) will be announcing earnings results tomorrow after market close. Here's what to look for.

Last quarter American Eagle reported revenues of $1.08 billion, up 2.45% year on year, beating analyst revenue expectations by 1.41%. It was good to see American Eagle beat analysts' revenue estimates this quarter. Guidance for next quarter's revenue and operating profit was generally fine. However, the company's full year outlook was below for both revenue and operating profit. Overall, it was a mixed quarter for American Eagle.

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 0.14% year on year to $1.2 billion, slowing down from the 0.33% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.16 per share.

American Eagle Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates three times over the last two years.

Looking at American Eagle's peers in the apparel retailer segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Abercrombie and Fitch delivered top-line growth of 16.2% year on year, beating analyst estimates by 10.8%, and Tilly's reported revenue decline of 4.97% year on year, exceeding estimates by 5.99%. Abercrombie and Fitch traded up 17.1% on the results, and Tilly's was up 11.0%.

Read our full analysis of Abercrombie and Fitch's results here and Tilly's's results here.

Stocks have been facing declining investor sentiment and while some of the apparel retailer stocks have fared somewhat better, they have not been spared, with share price declining 5.38% over the last month. American Eagle is up 13.5% during the same time, and is heading into the earnings with analysts' average price target of $15.0, compared to share price of $17.3.

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.

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