Eagle Flies Higher: Fool by Numbers

On Aug. 15, American Eagle Outfitters (Nasdaq: AEOS) released Q2 2006 earnings for the period ended July 29.

• Revenues rise 16.8% to more than $600 million.
• Net profit rises 24.3%; EPS rise even more because of a reduction in diluted share count.
• Margins up across the board.
• Free cash flow down due to increased capital expenditures.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Avg. Est.	Q2 2007	Q2 2006	Change
Sales	$597,680	$602,326	$515,868	16.8%
Net Profit	--	$72,099	$58,019	24.3%
EPS	$0.46	$0.47	$0.37	27.0%
Diluted Shares		152,807	157,806	(3.2%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q2 2007	Q2 2006	Change*
Gross Margin	45.58%	44.19%	1.39
Operating Margin	18.14%	16.60%	1.54
Net Margin	11.97%	11.25%	0.72

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q2 2007	Q2 2006	Change
Cash + ST Invest.	$814,090	$625,174	30.2%
Other Current Assets	$84,213	$83,148	1.3%
Inventory	$267,392	$271,661	(1.6%)

Liabilities	Q2 2007	Q2 2006	Change
Accounts Payable	$175,934	$145,939	20.6%
Long-Term Debt	$0	$0	N/A

Learn the ways of the balance sheet.

Cash Flow Highlights

	Q2 2007	Q2 2006	Change
Net Income + D&A	$177,193	$149,901	18.2%
Capital Expenditures	$103,000	$38,613	166.7%
Free Cash Flow*	$74,193	$111,288	(33.3%)

* Does not take into account changes in working capital.

Find out why Fools always follow the money.

Related companies:

• Abercrombie & Fitch (NYSE: ANF)
• Aeropostale (NYSE: ARO)
• Pacific Sunwear (Nasdaq: PSUN)
• The Buckle (NYSE: BKE)
• Gap (NYSE: GPS)
• Urban Outfitters (Nasdaq: URBN)

Related Foolishness:

• Foolish Fundamentals: Margins
• Foolish Fundamentals: Enterprise Value
• Foolish Fundamentals: Free Cash Flow

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.com for more of our in-depth discussion of what the numbers mean.

American Eagle Outfitters, Pacific Sunwear, and Gap areMotley Fool Stock Advisor recommendations. Afree trialis available. Gap is also aMotley Fool Inside Valueselection.

At the time of publication, Seth Jayson had shares of American Eagle Outfitters, but no positions in any other firm mentioned.Fool rules are here.