Here’s Why American Eagle Outfitters (AEO) Stock is Sliding
NEW YORK (TheStreet) -- American Eagle Outfitters (AEO) - Get Report stock is declining 6.38% to $14.60 in afternoon trading on Friday afternoon following several disappointing fiscal 2015 third quarter financial reports from retailers this week.
The retail sell-off began on Wednesday when Macy's (M) reported lower than expected sales and a 3.6% decline in same store sales.
Nordstrom (JWN) also missed revenue estimates when it reported on Thursday after the market close.
Although investors are blaming an unseasonably warm autumn, Nordstrom's management attributed the decline to weak mall traffic.
American Eagle Outfitters may be able to weather the storm after it announced last week a 9% increase in same stores sales for the fiscal 2015 third quarter.
The clothing retailer boosted its earnings guidance to 34 cents per share for the quarter, up from the previous outlook of 28 to 31 cents per share.
Analysts have estimated earnings of 33 cents per share on $923.67 million in revenue for the quarter.
American Eagle Outfitters will announce third quarter financial results on December 2 before the market open.
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 9.1%. 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.
- Powered by its strong earnings growth of 466.66% and other important driving factors, this stock has surged by 25.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in 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 ($1.06 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
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.