American Eagle Outfitters (NYSE:AEO) shares rose nearly 7% at the time of writing after the specialty retailer raised its outlook for the fourth quarter, fueled by solid holiday sales momentum.
Impressively, AEO’s fourth-quarter-to-date revenue soared by 8%. Additionally, American Eagle has achieved high single-digit growth, while Aerie is tracking higher in the low teens range. Further, the company has raised revenue growth expectations for the fourth quarter to low single digits. The operating profit for the quarter is now anticipated at $130 million versus the prior outlook of between $105 million and $115 million.
This upbeat outlook follows record holiday sales and gains in merchandise margins for the company. While the momentum has continued into January, AEO is also focusing on maintaining inventory and promotional discipline and keeping a lid on expenses.
Is AEO a Good Stock to Buy?
Today’s price jump takes American Eagle shares nearly 78% higher over the past six months. Overall, the Street has a Hold consensus rating on American Eagle, and the average AEO price target of $20.25 points to a nearly 4.8% potential downside in the stock.
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