AEO Earnings: American Eagle Gains on Solid Q4 Results

American Eagle Outfitters (NYSE:AEO) gained in trading after the clothing and accessories retailer announced its Q4 results. The company generated Q4 total net revenues of $1.7 billion, an increase of 12% year-over-year and above Street estimates of $1.67 billion. In addition, comparable sales rose by 6% in Q4.

AEO reported adjusted diluted earnings of $0.61 per share in the fourth quarter, surpassing consensus estimates of $0.50 per share.

In Q4, the company incurred an impairment charge of $131 million, $119 million of which was non-cash. AEO restructured its subsidiary Quiet Platforms to align with long-term strategies and streamline operations. AEO expects $20 million in annual savings in FY24.

For FY24, the firm expects operating income of $445 million to $465 million, with revenue increasing by 2% to 4% year-over-year. For the upcoming quarter, AEO has projected operating income to land between $65 million and $70 million, with revenue likely to grow by mid-single digits.

In addition, American Eagle Outfitters unveiled a three-year strategic roadmap that aims to see operating income grow at a compounded annual rate in the mid-to-high teens while revenue growth is likely to be between 3% and 5%. The company expects the operating margin to be 10% at the end of the next three years.

This strategy includes amplifying its brands while maintaining financial discipline and optimizing its operations for growth and profits.

Is AEO a Good Stock to Buy?

Analysts remain sidelined about AEO stock with a Hold consensus rating based on two Buys, five Holds, and one Sell. Over the past year, AEO stock has soared by more than 90%, and the average AEO price target of $23.88 implies a downside potential of 3.88% at current levels. However, these ratings will likely change after AEO announced its earnings today.