Summary of American Eagle Outfitters (NYSE: AEO):
First Quarter Earnings announcement and Market-positioning for_AEO:
American Eagle Outfitters (NYSE: AEO) is set to announce its fiscal first-quarter earnings on Thursday, May 29, 2025. Analysts have projected a earnings loss of 22 cents per share for the quarter, compared to a profit of 34 cents per share last year. The forecasted revenue is $1.09 billion in the first quarter, which is a 63% decline from last year’s $1.14 billion. This represents a 5.4% decline of the stock, as per historical data.
The company has averaged a negative one-day return of 5.4% since the company’s initial public offering (IPO), with a stock market decline of 14% at a peak. Despite the fluctuation, American Eagle remains a relatively undervalued stock, with a market cap of $2.0 billion.
Fourth-Quarter Financial Outlook:
For the current year, American Eagle anticipates a slight decline in sales, expected to drop by lower single digits. The company’s revenue for the past 12 months is $5.3 billion, operating profits of $445 million, and net income of $329 million, reflecting strong earnings. As of now, AEO is ranked at the 85th percentile in theearningsrank.comundreds list, making it one of the top performing companies in the banking sector.
Traders driven by events, with a history of leveraging past trends to gain advantage, may be more responsive to the earnings announcement compared to individual stocks. This reduces the risk associated with holding individual stocks.
Earnings Reaction History:
Looking at one-day (1D) (1D post-earnings returns), American Eagle’s strategy suggests that the stock tends to have a relatively small positive 40% one-day up day, with some negative days as well. A 36% negative one-day return occurred during the last three years of data. The median one-day 1D return is 2.4%, and the median 1D 5D (a five-day move) return is -5.4%.
The company’s past five years have shown 8 positive one-day returns, with the highest being 2.4%, and 12 negative 1D returns, with the lowest being -5.4%. The 5D and 21D returns maintain a slightly lower risk profile compared to one-year history.
Trend-Based Investing:
Traders may also consider a TIE ratio-based strategy, which has outperformed its all-cap benchmark (the Russell 2000, S&P 500, and mid-cap S&P 500) over the past five and three years. This strategy involves positioning based on short-term (1D) returns to enter the next 5 or 21 days.
Conclusion:
In conclusion, American Eagle is poised for either mid-term or long-term gains, especially considering the company’s past six-year performance with a strong return history compared to its decline of 22 cents per share. Investors hospitalized risk vs. reward, but they can expect the company to remain competitive amid market volatility. Other tutoring resources include tracking ratios and having access to industry data for more insights on American Eagle Outfitters.
