"American Eagle Earnings Imminent: Analysts Revise Forecasts Ahead of Call"

American Eagle Outfitters (AEO) is set to release its earnings report for the quarter ended January 2025 on March 12, 2025. The market is buzzing with anticipation as analysts and investors alike await the results. Wall Street expects a year-over-year decline in earnings on lower revenues, but the actual results could tell a different story. The key to understanding the potential impact on the stock price lies in how the actual numbers compare to these estimates. If American Eagle beats expectations, the stock could soar. Conversely, a miss could send it tumbling.

The Zacks Consensus Estimate for American Eagle's earnings is $0.50 per share, representing an 18% year-over-year decline. Revenues are expected to be $1.61 billion, down 4.3% from the year-ago quarter. However, the consensus EPS estimate for the quarter has been revised 1.06% lower over the last 30 days, reflecting analysts' collective reassessment of their initial estimates. This aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts, but it does provide a snapshot of the current sentiment.

The Zacks Earnings ESP (Expected Surprise Prediction) model offers a more nuanced view. This proprietary model compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate, reflecting the latest information from analysts revising their estimates right before an earnings release. For American Eagle, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +2.29%. This positive reading suggests that analysts have recently become more optimistic about the company's earnings prospects.

The combination of a positive Earnings ESP and a Zacks Rank of #3 (Hold) increases the likelihood of an earnings beat. According to Zacks research, stocks with this combination produce a positive surprise nearly 70% of the time. This means that if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter, and a positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a solid Zacks Rank.

American Eagle's historical performance in beating earnings estimates further supports this optimistic outlook. For the last reported quarter, the company was expected to post earnings of $0.46 per share but actually produced earnings of $0.48, delivering a surprise of +4.35%. Over the last four quarters, the company has beaten consensus EPS estimates four times. This consistent performance suggests that American Eagle has a strong foundation and is well-positioned to continue this trend.



However, it's important to note that an earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. Therefore, investors should pay attention to other factors as well, such as management's guidance and any unforeseen catalysts, for betting on this stock or staying away from it ahead of its earnings release.

In conclusion, American Eagle Outfitters appears to be a compelling earnings-beat candidate. The positive Earnings ESP, combined with the company's strong historical performance and solid Zacks Rank, increases the likelihood of another earnings beat. However, investors should also consider other factors and stay on top of upcoming earnings reports to make informed decisions.