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American Eagle Outfitters (AEOS). RECOMMENDATION: BUY. Background.
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American Eagle Outfitters (AEOS) RECOMMENDATION: BUY
Background • American Eagle Outfitters, Inc. is a specialty retailer of all-American, casual apparel, accessories, and footwear for men and women between the ages of 16 and 34. The Company designs, markets, and sells its own brand of versatile, relaxed, and timeless classics like AE jeans, khakis, and T-shirts, providing high quality merchandise at affordable prices. The Company currently operates 457 stores in 44 states. • American Eagle Outfitters, Inc. (Nasdaq: AEOS - news) today announced total sales for the four fiscal weeks ended October 30, 1999 increased 43.1% to $59.1 million from $41.3 million for the four week period ended October 31, 1998. Comparable sales for the 1999 period were up 21.9% compared to the corresponding four week period last year. • Sales for the thirty-nine weeks ended October 30, 1999 were $546.7 million compared to the $374.5 million for the thirty-nine week period last year, an increase of 46.0%. Comparable store sales for the thirty-nine weeks ended October 30, 1999 increased 24.5% compared to the corresponding thirty-nine week period ended October 31, 1998.
Background No insider trading since June.Directors tend to ‘flock’ when trading
Security Market Line: Dupont analysis:
CBS: One of my top picks is American Eagle Outfitters. That stock has come down quite severely over the last few weeks but their sales have been consistently the strongest amongst all the companies I cover. Same store sales have been in the 20s and 30s on top of some very strong numbers a year ago so clearly it is a company that is building a strong brand. There is really no reason for the decline in the stock. Earnings growth has been very strong -- they're going to report earnings on Wednesday of next week and I expect a very strong third quarter report. I think the outlook is very positive for the fourth quarter. • Robertson Stephens Managing Director and Senior Specialty Retailing Analyst Janet Joseph Kloppenburg, a 1999 Wall Street Journal All-Star Analyst, today raised estimates and reiterated her Buy rating on American Eagle Outfitters ``We believe the stock should appreciate back up to the 25 times level on our fiscal 2000 earnings-per-share estimate over the near-term, and long-term, should appreciate in tandem with further and significant earnings upside revisions,'' said Kloppenburg. ``Shares of American Eagle are currently trading at 21.7 times our new and potentially conservative fiscal 2000 estimate and represent a highly compelling investment relative to: 1. the 50 percent earnings growth the company has achieved in each of the past nine quarters and 2. the likelihood for further earnings upside throughout the remainder of fiscal 1999.`` • Expected growth of 25% over the next five years. My estimate was 24.1% Yahoo sees 2000 P/E of 25 • Recommendations: 7 strong buys, 5 moderate buys, 1 hold and 1 strong sell
Summary • Consistently increasing EPS since going public a few years ago beating analysts estimates. This has occurred over past 4 quarters • Overall performing better than industry and peers with higher margins • Firm has an excellent website in place for online shopping • Stock Price trading at P/E = 36 (below its historic average of 42) • Next two quarters are expected to be strong forthe industry • Recent stock jump 36 to 44 mayindicate insider leakage due toWednesday’s earnings announcement RECOMMENDATION: BUY
