American Eagle Shares Jumped: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of teen retailer American Eagle Outfitters (NYS: AEO) were looking quite trendy to investors in early trading, as they rose as much as 11%. The excitement faded quickly, though, shares finished the day up 3.5%, which was behind the Dow's 3.8% jump.

So what: It's been a tough slog for retailers as consumers continue to muddle through deleveraging their balance sheets and dealing with high unemployment. American Eagle, though, showed a bright spot on the top line in its third quarter by growing total sales 11% to $832 million and easily exceeding the $791 million expectation from Wall Street analysts. Comparable-store sales rose 5% after gaining just 1% for the same period in 2010.

The bottom line wasn't quite as exciting, but the $0.27 in earnings per share matched expectations. It was, however, down from the adjusted $0.29 earned a year ago.

Now what: When it comes to earnings releases, investors are often less concerned about what the company earned last quarter and more concerned about what it will earn next quarter. On that point, American Eagle's guidance was worth cheering. The company said:

"Strong sales over Thanksgiving weekend were driven by increased traffic and conversion. Powerful unit sales growth reflected a positive customer response to the holiday assortment and planned promotions."

The strong Thanksgiving weekend encouraged management to set its fourth-quarter per-share profit guidance at a range of $0.40 and $0.44, easily above the $0.39 that Wall Street had on its radar.

Want to keep up to date on American Eagle Outfitters?Add it to your watchlist.

At the time this article was published 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.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners