We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will American Eagle (AEO) Q3 Earnings Beat Despite the Odds?
Read MoreHide Full Article
American Eagle Outfitters, Inc. (AEO - Free Report) is expected to register declines in the top and bottom lines when it reports third-quarter fiscal 2022 results on Nov 22. The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1.2 billion, which indicates a decline of 5.2% from the year-ago reported figure. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 23 cents per share, suggesting a 69.7% decline from the year-ago quarter's reported number. The Zacks Consensus Estimate for the to-be-reported quarter's earnings has moved down by a penny in the past seven days.
We expect fiscal third-quarter total revenues to decrease 4.1% year over year to $1,221.4 million and the bottom line to decline 66.1% to 26 cents per share.
The company reported a negative earnings surprise of 69.2% in the last reported quarter. It has a negative earnings surprise of 19% for the trailing four quarters, on average.
American Eagle Outfitters, Inc. Price and EPS Surprise
American Eagle’s fiscal third-quarter results are likely to reflect the continued impacts of the tough macro environment and changing consumer spending behavior. High inflation rates, increased gas prices and stronger-than-expected demand for other discretionary categories are expected to have marred the company’s fiscal third-quarter performance.
Moreover, the company’s fiscal third-quarter performance is likely to have been affected by tough year-over-year comparisons. On the last reported quarter’s earnings call, management noted that brand revenues had declined in high-single digits in the early part of the quarter due to exceptional growth and a record back-to-school season last year. Our estimate indicates a 6.3% decline in brand revenues for the fiscal third quarter, with an 11.3% decline for the American Eagle brand.
The company has been witnessing higher freight costs, and increased rent and delivery expenses, which have been denting the gross margin. Rising inflation and higher gas prices also remain concerning. Higher markdowns to clear inventory, increased freight costs and the impacts of supply-chain acquisitions are expected to have weighed on the company’s gross margin in the to-be-reported quarter.
On the last reported quarter’s earnings call, the company anticipated gross margin to be in the mid-30s for the third quarter of fiscal 2022 due to higher markdowns from increased promotions and seasonal clearance cadence. We estimate the gross margin for the fiscal third quarter to decline 920 bps to 35.1%.
On the last reported quarter’s earnings call, management expected continued freight inflation to dent margins throughout fiscal 2022. We expect the adjusted operating margin to decline to 5.9%, whereas the company reported 16.5% in the year-ago quarter.
However, continued strength in the Aerie brand and a solid online show bode well. Our estimate for the Aerie brand revenues reflects an increase of 8.5% for the fiscal third quarter.
Also, AEO is on track with the Real Power, Real Growth value-creation plan. Its third-quarter fiscal 2022 performance is expected to have benefited from the significant progress on its Real Power Real Growth value creation plan. The plan has been driving profitability through real estate and inventory-optimization efforts, omni-channel and customer focus, and investments to improve the supply chain. The company’s efforts under the plan have been aiding the recovery of the American Eagle brand.
Moreover, the company announced non-critical expense reductions, a hiring freeze and a reduction in capex in the last reported quarter to uplift its financial position. As part of this initiative, it expanded expense cuts in store payroll, corporate, professional services and advertising. As a result, the company expects SG&A expenses to be flat year over year for the second half of fiscal 2022. This indicates slight SG&A leverage in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for American Eagle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Eagle has a Zacks Rank #4 (Sell) and an Earnings ESP of -3.83%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +6.31% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports third-quarter fiscal 2022 numbers. The consensus mark for DLTR’s quarterly earnings has moved up by a penny in the past seven days to $1.17 per share. The consensus estimate suggests a 21.9% increase from the year-ago quarter’s reported number.
Dollar Tree’s top line is expected to improve year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.84 billion, which suggests a rise of 6.6% from the figure reported in the prior-year quarter.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +7.18% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The consensus mark for BURL’s quarterly earnings has moved up by a penny in the past seven days to 52 cents per share. The consensus estimate suggests a 61.8% decline from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Burlington Stores’ quarterly revenues is pegged at $2.1 billion, which suggests a decline of 10.9% from the figure reported in the prior-year quarter.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +17.23% and a Zacks Rank of 3. The company is likely to register top and bottom-line declines when it reports third-quarter fiscal 2022 results. The consensus mark for DKS’ quarterly revenues is pegged at $2.7 billion, which suggests a decline of 1.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for DICK'S Sporting’s earnings has moved up 1.4% to $2.24 per share in the past 30 days. The consensus estimate indicates a 29.8% decline from the year-ago quarter’s reported figure.
Image: Bigstock
Will American Eagle (AEO) Q3 Earnings Beat Despite the Odds?
American Eagle Outfitters, Inc. (AEO - Free Report) is expected to register declines in the top and bottom lines when it reports third-quarter fiscal 2022 results on Nov 22. The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1.2 billion, which indicates a decline of 5.2% from the year-ago reported figure.
The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 23 cents per share, suggesting a 69.7% decline from the year-ago quarter's reported number. The Zacks Consensus Estimate for the to-be-reported quarter's earnings has moved down by a penny in the past seven days.
We expect fiscal third-quarter total revenues to decrease 4.1% year over year to $1,221.4 million and the bottom line to decline 66.1% to 26 cents per share.
The company reported a negative earnings surprise of 69.2% in the last reported quarter. It has a negative earnings surprise of 19% for the trailing four quarters, on average.
American Eagle Outfitters, Inc. Price and EPS Surprise
American Eagle Outfitters, Inc. price-eps-surprise | American Eagle Outfitters, Inc. Quote
Key Factors to Note
American Eagle’s fiscal third-quarter results are likely to reflect the continued impacts of the tough macro environment and changing consumer spending behavior. High inflation rates, increased gas prices and stronger-than-expected demand for other discretionary categories are expected to have marred the company’s fiscal third-quarter performance.
Moreover, the company’s fiscal third-quarter performance is likely to have been affected by tough year-over-year comparisons. On the last reported quarter’s earnings call, management noted that brand revenues had declined in high-single digits in the early part of the quarter due to exceptional growth and a record back-to-school season last year. Our estimate indicates a 6.3% decline in brand revenues for the fiscal third quarter, with an 11.3% decline for the American Eagle brand.
The company has been witnessing higher freight costs, and increased rent and delivery expenses, which have been denting the gross margin. Rising inflation and higher gas prices also remain concerning. Higher markdowns to clear inventory, increased freight costs and the impacts of supply-chain acquisitions are expected to have weighed on the company’s gross margin in the to-be-reported quarter.
On the last reported quarter’s earnings call, the company anticipated gross margin to be in the mid-30s for the third quarter of fiscal 2022 due to higher markdowns from increased promotions and seasonal clearance cadence. We estimate the gross margin for the fiscal third quarter to decline 920 bps to 35.1%.
On the last reported quarter’s earnings call, management expected continued freight inflation to dent margins throughout fiscal 2022. We expect the adjusted operating margin to decline to 5.9%, whereas the company reported 16.5% in the year-ago quarter.
However, continued strength in the Aerie brand and a solid online show bode well. Our estimate for the Aerie brand revenues reflects an increase of 8.5% for the fiscal third quarter.
Also, AEO is on track with the Real Power, Real Growth value-creation plan. Its third-quarter fiscal 2022 performance is expected to have benefited from the significant progress on its Real Power Real Growth value creation plan. The plan has been driving profitability through real estate and inventory-optimization efforts, omni-channel and customer focus, and investments to improve the supply chain. The company’s efforts under the plan have been aiding the recovery of the American Eagle brand.
Moreover, the company announced non-critical expense reductions, a hiring freeze and a reduction in capex in the last reported quarter to uplift its financial position. As part of this initiative, it expanded expense cuts in store payroll, corporate, professional services and advertising. As a result, the company expects SG&A expenses to be flat year over year for the second half of fiscal 2022. This indicates slight SG&A leverage in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for American Eagle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Eagle has a Zacks Rank #4 (Sell) and an Earnings ESP of -3.83%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +6.31% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports third-quarter fiscal 2022 numbers. The consensus mark for DLTR’s quarterly earnings has moved up by a penny in the past seven days to $1.17 per share. The consensus estimate suggests a 21.9% increase from the year-ago quarter’s reported number.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Dollar Tree’s top line is expected to improve year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.84 billion, which suggests a rise of 6.6% from the figure reported in the prior-year quarter.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +7.18% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The consensus mark for BURL’s quarterly earnings has moved up by a penny in the past seven days to 52 cents per share. The consensus estimate suggests a 61.8% decline from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Burlington Stores’ quarterly revenues is pegged at $2.1 billion, which suggests a decline of 10.9% from the figure reported in the prior-year quarter.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +17.23% and a Zacks Rank of 3. The company is likely to register top and bottom-line declines when it reports third-quarter fiscal 2022 results. The consensus mark for DKS’ quarterly revenues is pegged at $2.7 billion, which suggests a decline of 1.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for DICK'S Sporting’s earnings has moved up 1.4% to $2.24 per share in the past 30 days. The consensus estimate indicates a 29.8% decline from the year-ago quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.