Aeropostale's Still Flying High

Aeropostale (NYSE: ARO  ) has pulled off an immensely tricky feat among its fellow retailers: It's thriving in the tough consumer climate, as its latest quarterly results reveal.

The retailer's second-quarter net income increased 43% to $21.1 million, or $0.31 per share. Total sales increased 21% to $377.1 million, while same-store sales surged by 11%. (Comps had a slightly easy comparison, since they dipped 4% this time last year.)

Given the dramatic rise of Zumiez (Nasdaq: ZUMZ  ) shares today on far less bullish results and outlook, it may seem strange that investors would consider Aeropostale's tidings a bummer. Aeropostale dubbed both its second-quarter earnings and third-quarter outlook "in line," which basically means it didn't beat or lag anyone's expectations.

Still, with Aeropostale succeeding for months now in the midst of a tough consumer climate, its shares have enjoyed similarly robust returns. The stock's up 47% in the last year, the kind of achievement precious few other retailers can boast these days. Only Buckle (NYSE: BKE  ) and Children's Place (Nasdaq: PLCE  ) spring readily to mind, having risen 37% and 49%, respectively.

But really, who cares about short-term stock moves? We Fools are all about finding great long-term investments at solid prices. In that regard, Aeropostale's trading at just around 18 times trailing earnings, and it has a PEG ratio of 0.98. I think those multiples look pretty compelling, given how widely its outperformed its retail rivals lately. I think Aeropostale's ability to fly steady amid economic turbulence makes it a stock worth Fools' attention.

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Zumiez is a Motley Fool Hidden Gems recommendation. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.


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