Trade-Ideas: American Eagle Outfitters (AEO) Is Today's Post-Market Leader Stock

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 post-market leader 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 $79.9 million.
  • AEO is up 2.2% today from today's close.

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More details on AEO:

American Eagle Outfitters, Inc. operates as a specialty retailer of clothing, accessories, and personal care products in the United States and internationally. The stock currently has a dividend yield of 3.7%. AEO has a PE ratio of 56.1. Currently there are 7 analysts that rate American Eagle Outfitters a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for American Eagle Outfitters has been 5.4 million shares per day over the past 30 days. American Eagle Outfitters has a market cap of $2.6 billion and is part of the services sector and retail industry. The stock has a beta of 0.83 and a short float of 14.8% with 4.99 days to cover. Shares are down 1.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates American Eagle Outfitters as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • 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 0.70 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to $33.98 million or 16.39% when compared to the same quarter last year. Despite an increase in cash flow, AMERN EAGLE OUTFITTERS INC's average is still marginally south of the industry average growth rate of 21.88%.
  • AEO, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, AMERN EAGLE OUTFITTERS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AMERN EAGLE OUTFITTERS INC is currently lower than what is desirable, coming in at 33.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.81% trails that of the industry average.

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