American Eagle (AEO) Q3 Earnings Beat, Q4 View Hurt Stock

Looking Ahead

Management remains impressed with the company’s quarterly performance, particularly record sales growth. Further, the company noted that it had a positive start to the holiday season, delivering record volumes over Thanksgiving and Cyber Week shopping periods. The company expects to maintain the momentum and brand strength to drive growth in the future while delivering solid returns to shareholders. Considering these and other factors, American Eagle outlined its outlook for fourth-quarter fiscal 2018.

American Eagle anticipates comps for fourth-quarter fiscal 2018 to increase in a mid-single digit, with low-single-digit revenue growth. This is likely to result in adjusted earnings per share of 40-42 cents compared with adjusted earnings of 44 cents in the prior-year quarter. The guidance includes impacts related to the additional 53rd week in fiscal 2017. This should result in revenue loss of about $60 million and it should reduce earnings by 7 cents per share from the prior year. Further, the company’s EPS guidance stands significantly lower than the current Zacks Consensus Estimate of 46 cents, which probably has hurt investors’ sentiment.

Looking for Some Trending Picks? Look at These

Some better-ranked stocks in the same industry are Abercrombie & Fitch Company (ANF - Free Report) , Fossil Group, Inc. (FOSL - Free Report) and Shoe Carnival, Inc. (SCVL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).

Abercrombie & Fitch has gained 9.5% year to date. The company has long-term earnings growth rate of 12.5%.

Fossil Group delivered average positive earnings surprise of 119.5% in the last four quarters. Further, the stock has rallied 117.9% year to date.

Shoe Carnival stock grew nearly 27.4% in the last three months. Moreover, the company delivered average positive earnings surprise of 31.4% in the trailing four quarters.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this ...

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