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What's in the Cards for American Eagle (AEO) in Q2 Earnings?

American Eagle's (AEO) Q2 results are likely to reflect gains from growth across brands, online momentum and strong margins. "Real Power. Real Growth....

This story originally appeared on Zacks

American Eagle Outfitters, Inc. AEO is expected to register robust top- and bottom-line growth when it reports second-quarter fiscal 2021 results on Sep 2. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.23 billion, which indicates growth of 38.9% from the year-ago reported figure.

The Zacks Consensus Estimate for fiscal second-quarter earnings currently stands at 55 cents per share, suggesting substantial improvement from a loss of 3 cents reported in the year-ago quarter. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has moved up by a penny in the past seven days.

In the last reported quarter, the company delivered an earnings surprise of 6.7%. It has a trailing four-quarter earnings surprise of 24.9%, on average.

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Key Factors to Note

American Eagle’s second-quarter fiscal 2021 performance is expected to have benefited from continued growth across its American Eagle (AE) and Aerie brands in brands. The company has been particularly witnessing strong demand for its Aerie’s products, which has been contributing to sales, margins and profitability in the past few quarters. Increased investments in digital and omni-channel e-commerce, driven by expanded same-day facility and redesigned mobile app, have been acting as tailwinds.

Lower rent costs, reduced promotions and inventory optimization efforts have been aiding margins. Solid growth in merchandise margins across brands, stemming from escalated full-priced sales, might get reflected in in the to-be-reported quarter’s gross margin.

The company’s priorities, primarily focused on the “Real Power. Real Growth.” value creation plan, bode well. The efforts are expected to have fueled growth across brands and channels, and attracted new customers. This, in turn, might have contributed to the top line in the fiscal second quarter.

However, higher SG&A expense, due to elevated corporate salaries, variable selling expenses and performance-based incentive compensation, might have weighed on the to-be-reported quarter’s performance. The company’s top-line is expected to have been somewhat impacted by the persistence of the pandemic-led disruptions in some regions.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for American Eagle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

American Eagle has a Zacks Rank #3 and an Earnings ESP of +0.66%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat.

Chewy Inc. CHWY has an Earnings ESP of +100.00% and a Zacks Rank #1 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

CarMax, Inc. KMX currently has an Earnings ESP of +1.88% and a Zacks Rank #2.

Costco Wholesale Corporation COST has an Earnings ESP of +0.44% and a Zacks Rank #3 at present.

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American Eagle Outfitters, Inc. (AEO): Free Stock Analysis Report


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