American Eagle Outfitters (AEO) Stock Up on 9% Rise in Same Store Sales
NEW YORK (TheStreet) -- American Eagle Outfitters (AEO) - Get Report stock is up by 9.01% to $16.64 in early-morning trading on Tuesday, after the company announced that its same store sales rose by 9% in the 2015 third quarter.
Ahead of its Dec. 2 third quarter earnings release, the Pittsburgh-based apparel company raised its third quarter earnings guidance to 34 cents per share from 28 cents to 31 cents per share.
"We continue to experience greater full-priced selling and less promotional activity, resulting in profit margin expansion," Jay Schottenstein, interim CEO of American Eagle, said in a statement. "As we look ahead, we are optimistic about the upcoming holiday season and will continue executing customer-focused initiatives while delivering returns to shareholders."
Additionally, American Eagle announced that it will buy Tailgate Clothing, which is a vintage, sports-inspired clothing brand, for $11 million in cash and stock.
"We are thrilled to add these unique brands to our portfolio, which provide exciting new business opportunities," Schottenstein said. "Capital investments in the Tailgate and Todd Snyder brands will be paced, with a test and scale approach based on profitability and return on investment."
Separately, TheStreet Ratings team rates AMERN EAGLE OUTFITTERS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate AMERN EAGLE OUTFITTERS INC (AEO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AEO's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 12.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- AMERN EAGLE OUTFITTERS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AMERN EAGLE OUTFITTERS INC increased its bottom line by earning $0.46 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 472.2% when compared to the same quarter one year prior, rising from $5.81 million to $33.26 million.
- You can view the full analysis from the report here: AEO