American Eagle on a Pogo Stick: Fool by Numbers

On Nov. 14, casual-apparel retailer American Eagle Outfitters (Nasdaq: AEOS ) released Q3 2006 earnings for the period ended Oct. 28.

American Eagle appears to have connected with current trends this quarter. Sales jumped 20%, comparable-store revenue increased 13%, and consumers were willing to pay higher average product prices, resulting in great gross margins, too.
The balance sheet looks very healthy, with no debt and a growing cash hoard.
And that bank account is growing even after accounting for 24 new store openings and nine remodelings in the quarter. The company is on track for more than 115 new and remodeled stores in fiscal 2006.

(Figures in millions, except per-share data)

Income Statement Highlights

	*Avg. Est.*	Q3 2006	Q3 2005	Change
Sales	$691	$696	$580	19.9%
Net Profit	--	$100	$73	37.7%
EPS	$0.65	$0.66	$0.47	40.4%
Diluted Shares		152.3	156.0	(2.4%)

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

Margin Checkup

	Q3 2006	Q3 2005	Change*
Gross Margin	49.19%	46.40%	2.79
Operating Margin	21.90%	19.44%	2.46
Net Margin	14.50%	12.63%	1.87

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2006	Q3 2005	Change
Cash + ST Invest.	$757	$556	36.2%
Inventory	$348	$303	15.0%

Liabilities	Q3 2006	Q3 2005	Change
Accounts Payable	$213	$154	38.4%
Long-Term Debt	$0	$0	N/A

Learn the ways of the balance sheet.

Cash Flow Highlights

American Eagle left cash flow details out of the report. Throw us a bone, guys!

Find out why Fools always follow the money.

Retail Checkup

	Q3 2006	Q3 2005	Change
Days in Inventory	78.3	83.1	(4.8)
Days Payables Outstanding	49.5	43.4	6.1
Cash Conversion Cycle	28.8	39.7	(10.9)

Read up on cash conversion metrics.

Related Companies:

Aeropostale (NYSE: ARO )
Abercrombie & Fitch (NYSE: ANF )
Limited Brands (NYSE: LTD )
dELiA*s (Nasdaq: DLIA )

Related Foolishness:

American Eagle is a Motley Fool Stock Advisor selection. Which other apparel retailers made David and Tom Gardner's list of Wall Street's best investment opportunities? Find out with a free 30-day trial toStock Advisor.

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.

At the time of publication, Fool contributorAnders Bylund had no position in any company mentioned.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.