PITTSBURGH - American Eagle Outfitters , Inc. (NYSE: NYSE:AEO), a specialty retailer with a market capitalization of $3.12 billion, has revised its fourth-quarter financial outlook upwards following better-than-expected comparable sales figures. The company reported that sales are up in the low single digits through the first week of January, surpassing the initial forecast of a 1% increase. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, with strong financial health indicators supporting its growth trajectory.
The improved performance has prompted the retailer to adjust its operating profit expectations to approximately $135 million, an increase from the previously projected range of $125 million to $130 million. This revision is based on a 2% rise in comparable sales, which builds upon an 8% growth from the previous year. The company has maintained steady revenue growth, with a 6.38% increase in the last twelve months, though due to the retail calendar's impact, total revenue is anticipated to be down by roughly 5%.
American Eagle's Executive Chairman and CEO, Jay Schottenstein, attributed the success to robust December sales, new product offerings, and engaging customer experiences that fueled growth across both the American Eagle and Aerie brands. Schottenstein also highlighted the company's commitment to operational efficiencies, which is expected to result in significant operating profit growth for the year 2024.
In terms of shareholder returns, American Eagle has been active in the repurchase of its shares, buying back 1.5 million shares for $27 million in the fourth quarter to date. This brings the total repurchases for the year to 7.5 million shares at a cost of $158 million, with an additional 22.5 million shares still authorized for future repurchases. The company has also returned $231 million to shareholders through a combination of dividends and share repurchases over the same period. InvestingPro data reveals the company maintains a notable 3.08% dividend yield and has consistently paid dividends for 22 consecutive years, demonstrating its commitment to shareholder returns.
American Eagle Outfitters operates as a global specialty retailer with a portfolio that includes American Eagle, Aerie, and other brands. The company has a presence in the United States, Canada, Mexico, and through licensing partnerships, offers its merchandise in over 30 countries. It also maintains a strong e-commerce platform across its brand portfolio. For detailed insights into AEO's financial health, valuation metrics, and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US equities with expert analysis and actionable intelligence. This news is based on a press release statement from American Eagle Outfitters, Inc.
In other recent news, American Eagle Outfitters has been under the analytical lens of several financial firms. Raymond (NS:RYMD) James initiated coverage on the company with a Market Perform rating, projecting earnings per share (EPS) of $1.69 and $1.82 for fiscal years 2024 and 2025 respectively, and anticipating revenue growth of 1.4% and 3.1% for the same years. On the other hand, Morgan Stanley (NYSE:MS) maintained its Underweight rating but reduced the stock's price target to $15.00, citing concerns about the retailer's gross margin performance.
BMO Capital Markets also adjusted its outlook on American Eagle, reducing the price target to $20.00 while maintaining a Market Perform rating. The firm noted inconsistency in the company's digital sales despite strong customer response during key selling periods. JPMorgan downgraded the company's stock from Overweight to Neutral and reduced its price target from $27.00 to $23.00. The firm cited a 3% increase in same-store sales and a slight contraction in gross margin as key factors in its decision.
Lastly, Citi maintained a Neutral rating on American Eagle but reduced the stock's price target to $21. The firm noted a 3% increase in comparable store sales but also a steeper-than-expected decline in gross margins. These recent developments highlight the mixed views of financial firms on American Eagle's performance and future prospects.
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