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American Eagle Outfitters Stock: Why It Fell after Fiscal 4Q17

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Stock reacts negatively to fiscal 4Q17 results

American Eagle Outfitters (AEO) stock fell 4.6% on March 12, 2018, after it posted its fiscal 4Q17[1. Fiscal 4Q17 ended on February 3, 2018.] results on March 8, 2018. Its revenue of $1.23 billion beat analysts’ estimate of $1.21 billion. Its adjusted EPS (earnings per share) of $0.44 was in line with analysts’ projections.

On March 7, 2018, the company raised its quarterly dividend by 10% to $0.14, payable on April 27, 2018, to shareholders of record as of April 13, 2018.

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Despite the revenue beat, the stock fell 9.4% on March 8, 2018. The primary factor was the company’s margin performance. It reported a decline of 80 bps (basis points) for its gross margin due to higher markdowns since the promotional environment remained intense. For fiscal 2017, the company reported a gross margin of 36.1%, which was a fall of 180 bps.

For fiscal 2017, revenue was $3.78 billion against $3.77 billion projected by analysts. It rose 5.1% on a YoY (year-over-year) basis. Adjusted EPS for fiscal 2017 was $1.16, which was in line with analysts’ estimate but lower than $1.25 in fiscal 2016.

YTD stock price movement

On a YTD (year-to-date) basis, American Eagle Outfitters (AEO) stock has risen 4.4% to $19.63 as of March 12, 2018. In comparison, on a YTD basis as of March 12, 2018, Abercrombie & Fitch (ANF) stock has risen 25.5% to $21.88. Urban Outfitters (URBN) stock is unchanged at $35.06. Gap (GPS) stock has fallen 5.3% to $32.24.

Series overview

In this series on American Eagle Outfitters’ fiscal 4Q17 results, we’ll be looking at the company’s revenue, margins, and earnings. We’ll also take a look at analysts’ ratings for the stock.

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