Please ensure Javascript is enabled for purposes of website accessibility

Why American Eagle Outfitters Shares Popped Today

By Jeremy Bowman - May 19, 2016 at 2:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock jumped as the mall apparel retailer delivered a surprisingly strong earnings report.

What: Shares of teen apparel retailer American Eagle Outfitters (AEO -2.19%) were flying higher Thursday after posting strong results in its first-quarter earnings report. As of 1:32 p.m. EST, the stock was up 18%.

So what: American Eagle's results were all the more impressive considering the poor results in other corners of the apparel retail sector as traditional powerhouses like Gap, Inc. and major department store chains have been seeing sales fall sharply. The mall staple posted comparable sales growth of 6%, led by its Aerie brand of intimate apparel for women, which grew 32%, surging thanks to a new ad campaign that champions body-positivity.

Earnings came in at $0.22, above the company's guidance at $0.17-$0.19 and analyst estimates at $0.18. CEO Jay Schottenstein said, "In a tough retail environment, AEO delivered a strong first quarter, driven by compelling merchandise, strategic investments and solid execution."

Now what: The American Eagle comeback is for real as the stock is having its best day in four years. While rival Aeropostale flopped into bankruptcy, American Eagle was able to revamp its brand over the last two years, and shares are up 50% since their bottom in 2014. Looking ahead, management's guidance for the current quarter also helped reassure investors as the company lifted its EPS forecast to $0.20-$0.21 from $0.17 earlier and expects comparable sales growth in the low single digits. Considering the struggles many of its competitors are facing, American Eagle's report and guidance raise looks especially impressive.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

American Eagle Outfitters, Inc. Stock Quote
American Eagle Outfitters, Inc.
$14.04 (-2.19%) $0.32
The Gap, Inc. Stock Quote
The Gap, Inc.
$12.13 (-0.17%) $0.02
Aeropostale, Inc. Stock Quote
Aeropostale, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.