American Eagle Outfitters (NYSE:AEO)
Teen fashion can be fickle. What was popular yesterday can be doomed today. But American Eagle has managed to stay in the forefront of teen trends. Still, the company has seen its stock drift lower in 2011.
American Eagle has matched or bested Wall Street estimates in three of the last four quarters. In the quarter ending July 31 it missed expectations, but by only a penny per share. On Nov. 2 it raised guidance for the quarter ending Oct. 29.
For the full year ending January 31, 2012, Wall Street expects American Eagle to make 89 cents per share. That’s anticipated to grow by 16% to $1.03 per share in the following year. At current prices the stock trades for 13 times next year’s expected earnings.
If the Christmas season is strong, American Eagle is likely to do better than current Wall Street estimates. At these prices the stock is a buy.