What happened

Shares of American Eagle Outfitters (NYSE:AEO) rose as much as 5% in the first hour of trading on Thursday. The news driving the gain was the company's after-market earnings pre-announcement on Wednesday. It was pretty good reading.  

So what

The big story is that American Eagle Outfitters is seeing strength in both its core brand and its Aerie division. CEO Jay Schottenstein noted that he was "amazed" by the results at Aerie, which is the retailer's core growth platform at the moment. That said, he also stated that "stronger merchandise, marketing and inventory management" has led to solid results in the much larger American Eagle division. All in, the company expects to exceed its first-quarter projections when it reports earnings on May 26.  

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Image source: Getty Images.

There are no firm numbers yet, since the fiscal first quarter doesn't technically end until May 1. But the expectation is that revenue will exceed $1 billion and operating income will come in around $120 million. The top-line number represents 19% growth over pre-coronavirus sales levels, which is impressive given the broad impact of the ongoing pandemic. Meanwhile, operating income is expected to benefit from both high customer demand and improved margins. Overall, this is a pretty good update.  

Now what

Given the strength of the company's performance, long-term investors might be wondering why the stock only gained 5% on the news. The answer is likely that the shares have advanced around 130% since the start of 2020, before the pandemic was a major issue. Yes, it looks like American Eagle Outfitters is executing well. But it also seems like investors have figured this out already.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.