American Eagle Outfitters, Inc. (AEO) Q3 2024 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 05 2024
0mins
Should l Buy AEO?
Source: SeekingAlpha
Consolidated Revenue $1.3 billion, down 1% year-over-year due to a $45 million headwind related to the retail calendar.
Comparable Sales Increased 3%, following a 5% increase last year.
Operating Income $106 million, which included $18 million of impairment and restructuring costs. Adjusted operating income was $124 million, on the high end of guidance, with approximately $20 million headwind related to the shifted calendar.
Adjusted Operating Margin 9.6%, flat to last year.
Gross Profit Dollars $527 million, decreased 3% with a gross margin rate of 40.9%, compared to 41.8% last year.
SG&A Expenses Decreased 3% quarter-over-quarter, leveraging 50 basis points as a rate of sales.
Depreciation Down year-over-year, leveraging 40 basis points.
Tax Rate 26.1%, in line with guidance.
Adjusted Earnings Per Share $0.48 per share.
Ending Inventory Cost Up 5% year-over-year, positioned well for the holiday season.
Capital Expenditures (CapEx) Totaled $60 million for the quarter, bringing year-to-date investments to $158 million.
Shareholder Returns Approximately $24 million returned through cash dividends, bringing year-to-date returns through dividends and share repurchases to over $200 million.
Cash Position $160 million in cash and no debt.
Total Liquidity Over $800 million including the revolver.
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Analyst Views on AEO
Wall Street analysts forecast AEO stock price to rise
11 Analyst Rating
1 Buy
8 Hold
2 Sell
Hold
Current: 22.500
Low
20.00
Averages
24.80
High
35.00
Current: 22.500
Low
20.00
Averages
24.80
High
35.00
About AEO
American Eagle Outfitters, Inc. is a global specialty retailer. The Company offers clothing, accessories and personal care products under its American Eagle and Aerie brands. The Company operates through two segments: American Eagle and Aerie. American Eagle is an American jeans and apparel brand. Aerie is a lifestyle brand offering intimates, apparel, activewear, and swim collections. OFFLINE by Aerie offers a complete collection of activewear and accessories. The Company sells its products directly to consumers through its retail channel, which includes its stores and concession-based shops-within-shops. It operates stores in the United States, Canada, Mexico, and Hong Kong. The Company has license agreements with third parties to operate American Eagle and Aerie stores and online marketplace businesses throughout Asia, including India, Europe, Latin America, and the Middle East. The Company also operates Todd Snyder New York (Todd Snyder), a premium menswear brand.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
American Eagle Outfitters Set to Release Q4 Earnings on March 4
- Earnings Announcement: American Eagle Outfitters (AEO) is set to announce its Q4 earnings on March 4, with a consensus EPS estimate of $0.71 and revenue expectations of $1.74 billion, reflecting a robust year-over-year growth of 58.2%.
- Historical Performance: Over the past two years, AEO has exceeded EPS estimates 88% of the time and revenue estimates 50% of the time, indicating a strong track record of financial performance and market confidence.
- Revision Trends: In the last three months, AEO's EPS estimates have seen 10 upward revisions with no downward adjustments, while revenue estimates have experienced 9 upward revisions, showcasing analysts' optimistic outlook on the company's future performance.
- Retail Market Dynamics: While retail sales are accelerating, the sustainability of AEO's momentum remains a key focus for the market, particularly in the context of a potential sector rebound.
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- Market Response: Concerns over the conflict caused stock futures to plummet sharply in premarket trading, while gold futures rose as investors sought safe havens, and Wall Street's fear gauge surged to its highest level since 2026, indicating heightened market anxiety about future developments.
- Berkshire Hathaway Earnings: In Warren Buffett's last quarter as CEO, operating earnings fell nearly 30%, primarily due to a 54% drop in profits from the insurance underwriting business; however, new CEO Greg Abel's shareholder letter received positive feedback from analysts, reflecting a commitment to the company's value-focused philosophy.
- AI Technology Intervention: Trump mandated U.S. agencies to cease using Anthropic's technology, while OpenAI secured a deal with the Department of Defense, despite both companies having similar restrictions; notably, Anthropic's Claude AI app surged to the top of Apple's free apps list, suggesting a favorable public perception following its pushback against the Pentagon.
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American Eagle Outfitters Set to Release Q4 Earnings on March 4
- Earnings Announcement: American Eagle Outfitters (AEO) is set to announce its Q4 earnings on March 4, with a consensus EPS estimate of $0.71 and revenue expectations of $1.74 billion, reflecting a robust year-over-year growth of 58.2%.
- Historical Performance: Over the past two years, AEO has exceeded EPS estimates 88% of the time and revenue estimates 50% of the time, indicating a strong track record of financial performance and market confidence.
- Revision Trends: In the last three months, AEO's EPS estimates have seen 10 upward revisions with no downward adjustments, while revenue estimates have experienced 9 upward revisions, showcasing analysts' optimistic outlook on the company's future performance.
- Retail Market Dynamics: While retail sales are accelerating, the sustainability of AEO's momentum remains a key focus for the market, particularly in the context of a potential sector rebound.
See More
Analysis & Outlook: A Reality Assessment
- Market Reaction: Stocks opened significantly lower, indicating a shift away from the previous "ignore geopolitics" mindset.
- Recovery Trend: By late morning, there was a noticeable recovery in stock prices, suggesting some stabilization in the market.
See More
Major Retailers Continue Earnings Season This Week
- AST SpaceMobile Earnings Outlook: AST SpaceMobile, Inc. (NASDAQ:ASTS) is set to report its Q4 results after Monday's close, with Wall Street anticipating a loss of 16 cents per share on revenue of $41.11 million, indicating competitive pressures in the market.
- CrowdStrike Growth Target: CrowdStrike Holdings, Inc. (NASDAQ:CRWD) will release its earnings after Tuesday's close, with investors keen to see if it can achieve at least 50% year-over-year growth in net new ARR, confirming its 20% growth trajectory and justifying its premium valuation.
- Broadcom Earnings Focus: Broadcom Inc. (NASDAQ:AVGO) is expected to report its Q1 results on Wednesday afternoon, with analysts forecasting EPS of $2.02 on revenue of $19.14 billion, while investors will be watching if AI semiconductor revenue doubles to $8.2 billion.
- JD.com Earnings Preview: JD.com, Inc. (NASDAQ:JD) is expected to release its results before Thursday's open, with Wall Street predicting a loss of 3 cents per share and revenue of $50.22 billion, reflecting the challenges and opportunities in the Chinese e-commerce market.
See More
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- Market Response: Concerns over the conflict have sharply pulled back stock futures in premarket trading, while gold futures advanced as investors sought safe havens, indicating a strong market reaction to the heightened uncertainty surrounding future developments.
- Berkshire Hathaway Earnings Decline: In Warren Buffett's last quarter as CEO, Berkshire Hathaway reported a nearly 30% drop in operating earnings, primarily due to a 54% decline in profits from its insurance underwriting business, although new CEO Greg Abel's shareholder letter received positive feedback from analysts.
- AI Industry Developments: Trump forced U.S. agencies to cease using Anthropic's technology, while OpenAI secured a deal with the Department of Defense, highlighting intensifying competition in the AI sector; however, Anthropic's Claude AI app surged in popularity, suggesting a potential boost in public support for the company.
See More
Iran Conflict Triggers Market Turmoil
- Iran Conflict Escalation: The U.S.-Israeli operation named 'Operation Epic Fury' resulted in the assassination of Iran's Supreme Leader Khamenei, with hundreds of Iranian civilian casualties, likely leading to significant retaliatory actions and increased American military casualties, which could destabilize global markets.
- Market Response: Concerns over the conflict caused stock futures to plummet sharply in premarket trading, while gold futures rose as investors sought safe havens, and Wall Street's fear gauge surged to its highest level since 2026, indicating heightened market anxiety about future developments.
- Berkshire Hathaway Earnings: In Warren Buffett's last quarter as CEO, operating earnings fell nearly 30%, primarily due to a 54% drop in profits from the insurance underwriting business; however, new CEO Greg Abel's shareholder letter received positive feedback from analysts, reflecting a commitment to the company's value-focused philosophy.
- AI Technology Intervention: Trump mandated U.S. agencies to cease using Anthropic's technology, while OpenAI secured a deal with the Department of Defense, despite both companies having similar restrictions; notably, Anthropic's Claude AI app surged to the top of Apple's free apps list, suggesting a favorable public perception following its pushback against the Pentagon.
See More
Key Companies to Monitor This Week: Jobs, CrowdStrike, Target, Broadcom, Costco, and Others
- Stock Market Performance: The S&P 500 index fell by 0.4% last week, marking a 0.9% decline for February, which is only the second monthly drop since April.
- Trading Range: The S&P 500 has been trading within a narrow range this year, with a low of approximately 6800 and a high of around 7000.
See More
