Yahoo Finance Here's Why You Should Invest in American Eagle (AEO) Stock Now
American Eagle Outfitters, Inc. AEO stock is well-poised to tap the positive trends in the fashion arena, thanks to its digital endeavors and other robust strategies including the Real Power Real Growth Plan. The company is gaining from brand strength and solid demand for its products that resonate well with customers.
Buoyed by such strengths, shares of this apparel and footwear dealer have surged 65.9% compared with the industry’s 37.9% growth in a year. A VGM Score of A further adds strength to this Zacks Rank #2 (Buy) company.
Let’s Delve Deeper
American Eagle is on track with its Real Power Real Growth value-creation plan, which has been aiding its performance for a while now. The plan is driving profitability through real estate and inventory-optimization efforts, omnichannel and customer focus, and investments to improve the supply chain. The company is pursuing opportunities to grow the Aerie brand through expansion into newer markets, innovation and a wider customer base. Management also expects to undertake initiatives to deliver growth and sustained profitability for the American Eagle brand.
The company’s Powering Profitable Growth plan is designed to deliver annual operating income expansion in the mid-to-high teens, with a 10% operating margin over the next three years. The plan also targets annual revenue growth in the range of 3-5% through the end of fiscal 2026. This indicates revenues in the range of $5.7-$6.0 billion and a 10% operating margin.
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The Aerie brand is a key growth engine for American Eagle and remains on track to reach the next brand milestone of $2 billion in sales. Further, the company’s profit-improvement endeavors have been paying off. Higher merchandising margins from lower markdowns coupled with inventory control, and lower freight and product costs are other positives. Driven by these factors, the gross margin expanded 240 basis points (bps) year over year whereas the operating margin rose 270 bps year over year during the fiscal first quarter.
Analysts seem quite optimistic about Aerie’s parent company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is currently pegged at $5.4 billion and $1.71, respectively. These estimates indicate corresponding growth of 3.2% and 15.1% year over year. Given all the positives, American Eagle stock seems to be a decent bet in your investment portfolio.
Other Key Picks
We have highlighted three other top-ranked stocks, namely Abercrombie & Fitch ANF, Gap GPS and Deckers DECK.
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales indicates growth of 10.4% from the year-ago reported figure. ANF delivered an earnings surprise of 28.9% in the last reported quarter.
Gap, a leading apparel retailer, currently sports a Zacks Rank of 1. GPS delivered an average earnings surprise of 202.7% in the trailing four quarters.
The Zacks Consensus Estimate for Gap’s current financial-year sales indicates growth of 0.2% from the year-ago reported figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2. DECK delivered an earnings surprise of 42.8% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 15.6% from the year-ago reported figure.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
