Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and American Eagle Outfitters (NYSE:AEO) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

As a retailer oriented toward fickle teens, American Eagle Outfitters constantly has to navigate the changing trends of the fashion world. In 2012, the company did a good job capturing profits and impressing shareholders, but can American Eagle keep up its successful ways this year? Let's take an early look at what's been happening with American Eagle Outfitters over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on American Eagle Outfitters

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$1.12 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will American Eagle Outfitters look pretty this quarter?
Analysts haven't changed their views on American Eagle at all recently, holding their estimates for the just-ended quarter and for fiscal 2014 earnings steady. After a big run early in 2012, the stock hasn't moved much either, falling just 1% since early December.

American Eagle has done a good job of keeping itself healthy from a financial standpoint, with strong operating margins. In this dog-eat-dog corner of the retail world, what benefits one company usually comes at the expense of another, and rival Aeropostale (NYSE:AROPQ) has been on the short end of the stick in teen retail lately, as analysts have argued that shoppers with limited money to spend used it at American Eagle and Abercrombie & Fitch instead.

But American Eagle's same-store sales have slowed down substantially in recent months, with figures of 5% for the quarter through the beginning of January representing a haircut of more than half from the year-ago quarter and 5 percentage points sequentially. That has gotten the company to work on remodeling stores with good sales and closing ones that have bad sales, as well as working on streamlining inventory delivery on products that look particularly promising.

To grow, American Eagle is looking for ways to expand its coverage to grab new market segments. For instance, the retailer has ramped up its Aerie women's intimates line, and although Limited Brands' (NYSE:BBWI) Victoria's Secret has a commanding lead in the space, there's plenty of room for American Eagle to claim at least some market share in the lucrative niche. Moreover, American Eagle is boosting its international presence, having opened stores in Mexico and the Philippines and taking over six Chinese stores all within the first two months of 2013.

In American Eagle's report, watch for information about how its overseas forays are doing, while still keeping an eye on final data on the holiday season. Unfortunately, in this space, a company that does well one year can do horribly the next simply by making a fashion mistake, so to invest in this industry, you'll need to keep paying attention to American Eagle and its peers as the spring season ramps up.

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