American Eagle Outfitters, Inc. (NYSE:AEO) Earnings Preview: Key Insights

• Anticipated Earnings Release: AEO is expected to report quarterly earnings on March 12, 2025, with an estimated EPS of $0.50 and revenue of approximately $1.6 billion.
• Performance Expectations: Despite a projected 4.3% decline in revenues, AEO has a history of surpassing earnings expectations, suggesting potential for another positive outcome.
• Financial Metrics: AEO's financial metrics indicate a modest market valuation with a P/E ratio of approximately 10.02 and a solid return on investment with an earnings yield of 9.98%.

American Eagle Outfitters, Inc. (NYSE:AEO) is a well-known American clothing and accessories retailer. The company operates under two main brands: American Eagle and Aerie. Both brands have shown positive trends, especially during the holiday season, which is expected to influence the company's fourth-quarter fiscal 2024 results. The company competes with other retail giants like Abercrombie & Fitch and Gap Inc.

On March 12, 2025, AEO is set to release its quarterly earnings, with Wall Street analysts estimating an earnings per share (EPS) of $0.50 and revenue of approximately $1.6 billion. Despite a projected 4.3% decline in revenues to $1.61 billion compared to the same quarter last year, the company has a history of surpassing earnings expectations. In the last reported quarter, AEO beat the consensus estimate by 4.4%, delivering an earnings surprise of 12.6%.

The anticipated decline in earnings, with EPS expected to decrease by 18% from 61 cents to 50 cents, is attributed to lower revenues for the quarter ending January 2025. However, AEO's consistent performance in exceeding earnings expectations, with an average surprise of 3.49% over the last two quarters, suggests potential for another positive outcome. In the most recent quarter, AEO reported $0.48 per share, surpassing the expected $0.46, marking a 4.35% surprise.

AEO's financial metrics indicate a modest market valuation. The company's price-to-earnings (P/E) ratio is approximately 10.02, and its price-to-sales ratio is about 0.43. The enterprise value to sales ratio stands at 0.66, while the enterprise value to operating cash flow ratio is 9.13, reflecting cash flow efficiency. With an earnings yield of 9.98%, AEO offers a solid return on investment for shareholders.

The company's debt-to-equity ratio is 0.80, indicating a moderate level of debt compared to equity. Additionally, AEO's current ratio of 1.57 suggests a good level of liquidity to cover short-term liabilities. As the earnings report approaches, the management's discussion during the earnings call will be crucial in assessing the sustainability of any immediate price changes and future earnings projections.