Trouble for AEO

IN AND OUT INVESTING - Mastery

Set back for American Eagle.

American Eagle Outfitters (AEO) had a rough earnings call last week.  Could it be time to re-enter now that it has backed down?

AEO got killed on Friday, the stock was down as much as 11% on Friday.  Plain and simple, the company disappointed the Street.

For the fourth quarter, American Eagle sees earnings per share of just $0.26-$0.30, well below estimates at $0.39, and expects another mid-single-digit decline in same-store sales.

There is a ton of great competition, Urban Outfitters (URBN), The Gap (GAP), and more teeny pop stores I avoid at the mall.  If you are thinking about getting in on AEO on the dip, be patient.  I believe shares will fall lower.

We don't pay for past performance, only looking forward.  Looking ahead its difficult for AEO.  I do like the over 3% annual dividend yield but it's not enough to get me to buy at $14.  I will wait for the $13 range or lower before making a move. (source:trendsandreturns.com)