Aeropostale Earnings Preview

Motley Fool Staff
Updated

After beating estimates last quarter by $0.03, Aeropostale (NYS: ARO) has set the standard for itself. The company will unveil its latest earnings on Thursday, March 8. Aeropostale is a mall-based retailer that sells casual apparel and accessories for young adults.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Aeropostale, with 14 out of 23 analysts rating it a hold. Analysts don't like Aeropostale as much as competitor Zumiez overall. Seven out of 17 analysts rate Zumiez a buy compared to seven out of 23 for Aeropostale. That rating hasn't budged in three months as analysts have remained steadfast in their opinion of the stock.

  • Revenue forecasts: On average, analysts predict $808.9 million in revenue this quarter. That would represent a decline of 3.6% from the year-ago quarter.

  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.38 per share. Estimates range from $0.35 to $0.41.

What our community says:
CAPS All-Stars are solidly behind the stock, with 96.3% granting it an outperform rating. Most of the community is in line with the All-Stars, with 94.3% assigning it a rating of outperform. Over the past month, Fools have logged just two posts on Aeropostale. The tone of their comments has generally been bullish. Aeropostale has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Aeropostale's income has fallen year over year by an average of 57.3% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 9.5 percentage points in the last quarter. Revenue fell 1% while cost of sales rose 13.8% to $435 million from a year earlier.

Now, a look at how efficient management has been at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. For four quarters in a row, the company has seen decreases in net margins year over year. Net margins reflect what percentage of revenue becomes profit. Here is how Aeropostale has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

27.1%

24.4%

29.1%

35.5%

Operating Margin

6.7%

1.2%

5.9%

17.1%

Net Margin

4.0%

0.6%

3.5%

10.0%

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

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Earnings estimates provided by Zacks.

At the time thisarticle was published

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