Today's Water-Logged And Getting Wetter Stock: American Eagle Outfitters (AEO)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified American Eagle Outfitters ( AEO) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified American Eagle Outfitters as such a stock due to the following factors:

  • AEO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.2 million.
  • AEO has traded 917,934 shares today.
  • AEO traded in a range 201.3% of the normal price range with a price range of $0.76.
  • AEO traded below its daily resistance level (quality: 28 days, meaning that the stock is crossing a resistance level set by the last 28 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in AEO with the Ticky from Trade-Ideas. See the FREE profile for AEO NOW at Trade-Ideas

More details on AEO:

American Eagle Outfitters, Inc., together with its subsidiaries, operates as an apparel and accessories retailer in the United States and Canada. The stock currently has a dividend yield of 3.1%. AEO has a PE ratio of 14.4. Currently there are 4 analysts that rate American Eagle Outfitters a buy, no analysts rate it a sell, and 12 rate it a hold.

The average volume for American Eagle Outfitters has been 4.3 million shares per day over the past 30 days. American Eagle Outfitters has a market cap of $3.1 billion and is part of the services sector and retail industry. The stock has a beta of 0.62 and a short float of 6.3% with 2.52 days to cover. Shares are down 20% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates American Eagle Outfitters as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $29.20 million or 35.65% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.35%.
  • AEO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, AMERN EAGLE OUTFITTERS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • AEO, with its decline in revenue, underperformed when compared the industry average of 9.0%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Dow Lower as Energy Shares Fall on Drop in Oil Prices

Dow Lower as Energy Shares Fall on Drop in Oil Prices

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

Italian Bonds Slump as Government Mulls Anti-Euro Finance Minister

Italian Bonds Slump as Government Mulls Anti-Euro Finance Minister

Global Stocks Hold Gains as North Korea Response on Talks Soothes Nerves

Global Stocks Hold Gains as North Korea Response on Talks Soothes Nerves

One Thing to Consider Over Memorial Day Weekend: Are Stocks About to Collapse?

One Thing to Consider Over Memorial Day Weekend: Are Stocks About to Collapse?