Aeropostale Earnings Preview

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Aeropostale (NYS: ARO) only managed to meet estimates last quarter, but investors hope that it will surpass expectations this quarter. The company will unveil its latest earnings on Thursday, August 18. Aeropostale operates as a mall-based retailer of casual apparel and accessories for young women and men in the United States.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Aeropostale with 16 of 25 analysts rating it hold. Analysts don't like Aeropostale as much as competitor Zumiez overall. Nine out of 20 analysts rate Zumiez a buy compared to six of 25 for Aeropostale. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $490.9 million in revenue this quarter. That would represent a decline of 0.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is a loss of $0.03 per share. Estimates range from a loss of $0.04 to a loss of $0.03.

What our community says:
CAPS All-Stars are solidly backing the stock with 94.9% granting it an "outperform" rating. The community at large agrees with the All-Stars, with 94.3% awarding it a rating of "outperform." Fools are bullish on Aeropostale and haven't been shy with their opinions lately, logging 364 posts in the past 30 days. Even with a robust four out of five stars, Aeropostale's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Aeropostale's income has fallen year over year by an average of 17.7% over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 10.3 percentage points in the last quarter. Revenue rose 1.2% while cost of sales rose 18.4% to $332.5 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

29.1%

35.5%

36.6%

37.3%

Operating Margin

5.9%

17.1%

16.0%

14.4%

Net Margin

3.5%

10.0%

9.7%

8.8%

For all our Aeropostale-specific analysis, including earnings and beyond, add Aeropostale to My Watchlist.

The Motley Fool owns shares of Aeropostale.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

At the time this article was published

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