(AEOS) - Receiving a number of upward earnings estimate revisions

American Eagle Outfitters, Inc. (AEOS), a Zacks #1 Rank stock, has not reported a negative earnings surprise over the past 16 quarters. The company recently upped its third-quarter 2006 earnings per share guidance to between 56 cents and 58 cents. A new line called aerie by American Eagle launched in mid August should help fuel further sales growth. Strong cash flows from operating activities have led to a current dividend yield of 1.0%. Full Analysis American Eagle Outfitters, Inc. is a leading retailer that designs, markets and sells its own brand of laidback, current clothing targeting 15 to 25 year-olds. The company currently operates 815 stores in 50 states, the District of Columbia and Puerto Rico, and 71 stores in Canada. AEOS has a truly remarkable record when it comes to topping the Street's earnings estimate. The company exceeded analysts' earnings expectations in 13 out of the past 16 quarters. Furthermore, over the past 16 quarters, AEOS did not report a negative earnings surprise. On Aug 15, the company beat the consensus estimate by a penny when it posted second-quarter profits of $72.1 million, or 47 cents per share. AEOS's earnings per share in the prior-year period came in at 37 cents. Total sales jumped 16.8% to $602.3 million from $515.9 million last year. Same-store sales, or sales at stores open at least one year, rose 10%. CEO Jim O'Donnell stated, “American Eagle delivered solid top-line growth, outstanding profitability and strong cash flow for the second quarter of 2006.” Citing the company's August performance, which was fueled by its back-to-school sales, AEOS boosted its third-quarter 2006 earnings per share guidance to between 56 cents and 58 cents, compared to its previous guidance that called for profits between 52 cents and 54 cents. August same-store sales increased 11%, while analysts were expecting growth of 9.1%. On Aug 17, the company launched aerie by American Eagle. Available in stores across the country and online, the new line consists of dormwear and intimates for 15- to 25-year-old girls. Furthermore, a stand-alone aerie store was opened in Haywood Mall in Greenville, South Carolina, with two more expected to open this year. President and Chief Merchandising Officer Susan McGalla stated, “Our customers will love aerie for the same reasons they love AE sportswear and accessories—excellent fit, value and style.” AEOS has been receiving a number of upward earnings estimate revisions. The consensus estimate for this year has risen 5.5% to $2.32 over the past 60 days. Profit forecasts for next year increased 4.9% to $2.56 over the same period of time. Earnings per share are forecasted to grow 15.0% over the next 3-5 years. The Board of Directors declared a quarterly cash dividend of 11.25 cents per share on Aug 16. Strong cash flows from operating activities enabled AEOS to offer a current dividend yield of 1.0%. The company increased revenues for nine years running. AEOS's profitability, measured by its return on equity, crushes that of the industry average—27% compared to 19%. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. This important indicator is updated daily on Zacks.com and is available to Zacks Premium subscribers. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. | Blog Home| VitalStocks Home