American Eagle on a Dismal Run - Analyst Blog

It seems that investors are losing confidence in American Eagle Outfitters Inc. AEO, after this casual apparel and accessories retailer disappointed with its fourth-quarter fiscal 2013 performance. Shares of this Zacks Rank #4 (Sell) have dropped about 9.6% since the earnings announcement on Mar 11, whereas year-to-date the stock has fallen roughly 19.5%. Alongside, the stock reached a 52-week low of $11.48, yesterday.

Estimates for American Eagle have shown a downtrend since the company posted the results. The softness in results triggered a downtrend in the Zacks Consensus Estimates, as analysts become less constructive on the stock's future performance.

This is evident from the movement witnessed in the Zacks Consensus Estimate that tumbled 24.4% to 65 cents for fiscal 2014 in the past 30 days. For fiscal 2015, the Zacks Consensus Estimate decreased 21.3% to 85 cents in the same period.

American Eagle posted fourth-quarter fiscal 2013 adjusted earnings of 27 cents a share, plunging 50.9% from the prior-year quarter. The year-over-year decline was mainly due to lower sales and weak merchandise margins, partially offset by effective cost management.

American Eagle's net sales declined 6.7% year over year to $1,041.7 million in the fourth quarter and came below the Zacks Consensus Estimate of $1,065 million.

Battered by the dismal results and harsh winter weather, the company came up with a bleak outlook for the first quarter of fiscal 2014. American Eagle projects earnings per share for the first quarter of fiscal 2014 to break even against 18 cents earned in the first quarter of fiscal 2013.

Other Stocks that Warrant a Look

Other better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include Hanesbrands Inc. HBI, Foot Locker, Inc. FL and American Apparel, Inc. APP. All these stocks carry a Zacks Rank #2 (Buy).