The company posted adjusted fourth-quarter earnings per share of 39 cents on sales of $1.3 billion.
American Eagle had been expected to report net income of $67.5 million, or 36 cents a share, on sales of $1.3 billion, based on a FactSet survey of 14 analysts.
In the same period a year ago, the company posted earnings of 37 cents a share on sales of $1.3 billion. It reported net income of $80.8 million.
The stock has risen 41.2% since the company last reported earnings on Nov. 24.
"We ended 2020 on a positive note, with fourth quarter adjusted operating income up 38%, driven by strong margins across brands," said Jay Schottenstein, American Eagle CEO and executive chairman, in a statement.
The company has been developing its underwear and loungewear brand, called Aerie, even as it closes mall-based stores hard hit by the Covid pandemic.
American Eagle said Aerie revenue increased 25% to $337 million and comparable sales increased 29% in the latest quarter.
"We entered 2021 with momentum, and as reviewed at our January investor meeting, we see significant opportunity to drive Aerie’s growth and deliver strong profit margins in the coming years," Schottenstein said in the statement.
The company said its board has approved reinstating its quarterly cash dividend at 13.75 cents per share. The dividend is payable on March 26, to stockholders of record at the close of business on March 12. American Eagle also "unsuspended its share repurchase program."
Shares of American Eagle fell 81 cents, or 3.2% to $24.62 in after-hours trading Wednesday.
In the regular session, the stock rose 1.2% on an otherwise down day for Wall Street.