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Wednesday, September 30, 2020

Investor Confidence is Falling for American Eagle Outfitters Inc. (NYSE:AEO)

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The American Eagle Outfitters Inc. (AEO) shares are trading at lower $10.00 and the avg recommendation for the stock is Moderate Buy. while the current analyst price target stands at $12.59.

To add more color to this target, the company’s high over the last year is $18.42 and the low is $6.53. Over the last 52 weeks, AEO is down -45.70% while the S&P 500 is up 0.81%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, AEO reported a profit of $28.31 million. American Eagle Outfitters Inc. also saw revenues increase to $551.69 million. In addition, AEO has free cash flow of -$243.8 million as of 04-2020. The company’s EBITDA came in at -$314.82 million which compares well with its peers.

AEO booked profit margins of -2.70%, its Return on Equity (ROE) is -9.00%, and its Return on Assets is -3.10%. All told, it is clear that, AEO needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. AEO has a short ratio of 3.54 and outstanding shares of 166.78M.

Company Outlook

AEO has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 6.74 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at -0.66. American Eagle Outfitters Inc. AEO also noted assets of $3.63 billion at the end of the last quarter. Investors should also keep an eye on sector updates as AEO has historically followed its peers on positive news.

All told, American Eagle Outfitters Inc. AEO has strung together solid data and demonstrated underlying fundamentals. At its current valuation, AEO represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

American Eagle Outfitters Inc. AEO is now commanding a market cap of 1.74B and a float of 153.80M. AEO is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of AEO stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in AEO, either long or short, and we have not been compensated for this article.

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