Monday, March 7, 2016

Seeking Alpha: American Eagle Trying To Fly Unfriendlier Skies

I continue to be impressed with the turnaround at American Eagle (NYSE:AEO), but the path ahead doesn't get any easier for this teen retailer. Production innovation, international expansion, and the growth of the "aerie" franchise all offer opportunities for growth, but margin leverage is going to be harder to come by and management will be challenged to prove that the recent run of strong performance is more than just a recovery from past missteps and/or taking advantage of weakness at competitors.

I wasn't all that impressed with the valuation opportunity back in the summer and the shares were down about 20% from that piece until a strong February rebound. I see more value in the shares now, but I do have some concerns that the Street's expectations for growth may be less than reasonable and that the shares could be punished if management "only" does a good job.

Continue here:
American Eagle Trying To Fly Unfriendlier Skies

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