American Eagle Outfitters, Inc. AEO is scheduled to report fourth-quarter fiscal 2024 results on March 12, after the opening bell.

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The Zacks Consensus Estimate for AEO’s fiscal fourth-quarter revenues is pegged at $1.61 billion, suggesting a 4.3% decline from the year-ago quarter's reported figure. For fiscal fourth-quarter earnings, the consensus mark is pegged at 50 cents per share, implying an 18% decline from the 61 cents reported in the year-ago quarter. The consensus estimate for earnings has been unchanged in the past 30 days.

American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise

American Eagle Outfitters, Inc. price-consensus-eps-surprise-chart | American Eagle Outfitters, Inc. Quote

In the last reported quarter, American Eagle's earnings beat the consensus estimate by 4.4%. Moreover, AEO has delivered an earnings surprise of 12.6%, on average, in the trailing four quarters.

Earnings Whispers for AEO Stock

Our proven model conclusively predicts 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, which is the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

American Eagle has an Earnings ESP of +2.29% and carries a Zacks Rank of 3 at present.

Things to Know About AEO’s Upcoming Results

American Eagle has experienced strong momentum, driven by well-curated product assortments and enhanced customer engagement, leading to robust holiday performance. With continued positive trends in American Eagle and Aerie, the company expects improved profitability compared to prior projections. These factors are set to support performance in the to-be-reported quarter.

The company said that fourth quarter-to-date comparable sales (comps) through Jan. 4, 2025, increased in low-single digits, well ahead of its earlier outlook of being positive 1%. Management now envisions fiscal fourth-quarter operating profit to be nearly $135 million, up from the earlier guidance of $125-$130 million. Our model predicts an estimate of $134.9 million, down 4% year over year.

The company’s guidance is based on comps growth of about 2% for the fourth quarter of fiscal 2024 compared with the 8% rise in the prior year. We expect comparable sales to increase 0.7% for the fourth quarter.

American Eagle’s strategic initiatives have positioned it for sustained growth and improved operational efficiency. The disciplined approach to cost management, alongside a focus on profitability, is expected to contribute positively to the fiscal fourth quarter results.

American Eagle is on track with its Powering Profitable Growth plan and remains committed to amplifying brands, optimizing operations and executing the financial discipline. AEO’s profit improvement initiatives have been paying off. These strengths are expected to have bolstered the company’s performance.

However, American Eagle has been witnessing higher markdowns and increased costs related to buying, occupancy and warehousing. This is expected to have weighed on the company’s margins in the to-be-reported quarter.

Looking ahead to the fourth quarter, the company’s strategic cost-management efforts and disciplined inventory control will be key in mitigating these challenges. American Eagle aims to stabilize margins and drive profitability by focusing on expense efficiencies and operational improvements. Additionally, continued investments in brand strength and omni-channel capabilities should support revenue growth, helping offset margin headwinds and positioning the company for improved performance.

Our model predicts fourth-quarter fiscal 2024 total revenues to decline 4% year over year. We expect sales for the American Eagle brand to dip 2.6%. Sales for the Aerie brand are expected to decline by 1.1%.

AEO’s Valuation Picture

From a valuation perspective, American Eagle’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 6.80, below the five-year median of 12.36 and the Retail-Apparel & Shoes industry’s average of 16.94, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.

AEO's Valuation

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Other Stocks With Favorable Combination

DICK'S Sporting Goods, Inc. DKS currently has an Earnings ESP of +0.11% and a Zacks Rank of 2. DKS is expected to have reported a decline in its top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.75 billion, which indicates a 3.3% decrease from the figure reported in the year-ago quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for DKS’ fiscal fourth-quarter earnings is pegged at $3.47 per share, down 9.9% from the year-ago quarter. The consensus mark for earnings has moved up by a penny in the past 30 days. DICK’S has delivered a trailing four-quarter earnings surprise of 11.4%, on average.

Five Below FIVE has an Earnings ESP of +1.45% and a Zacks Rank of 3 at present. FIVE’s top line is anticipated to advance year over year when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.38 billion, which suggests a 3.1% rise from the figure reported in the year-ago quarter.

The company is expected to register a decline in the bottom line. The consensus estimate for Five Below’s fourth-quarter earnings is pegged at $3.35 per share, down 8.2% from the year-ago quarter. FIVE has a trailing four-quarter earnings surprise of 39%, on average.

Williams-Sonoma WSM currently has an Earnings ESP of +3.02% and a Zacks Rank #3. WSM is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2024 results. The consensus mark for revenues is pegged at $2.34 billion, indicating a rise of 2.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the quarterly earnings per share is pegged at $2.91, up 7% from the prior-year quarter. WSM has a trailing four-quarter earnings surprise of 17.8%, on average.

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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report

Five Below, Inc. (FIVE) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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