American Eagle Outfitters (AEO): Competitor Closure Should Bump Consensus SSS and EPS Higher - FBR
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FBR Capital analyst, Susan Anderson, reiterated her Outperform rating on shares of American Eagle Outfitters (NYSE: AEO) after hearing some investor skepticism concerning AEO's ability to continue to drive the comp in 2H16/2017.
The analyst expects good product execution (innovative, technical, differentiated, trend-right fashion) to continue to drive SSS as well as AEO to benefit from competitor closures and sales retention in its own closed stores.
The analyst performed a sales retention analysis and a competitor closure analysis, which showed that AEO's SSS could benefit +0.9% in 2016 and +2.2% in 2017 from its own and competitor store closures. If correct, this could add $0.01/$0.03 to EPS in 2016/2017.
As a result, she is increasing comp estimates ahead of consensus to +3.0%/+4.0% in 3Q16/4Q16 (versus the Street at +2.9%/+3.3%. Our EPS estimates go to $1.33/$1.45 in 2016/2017, versus our previous estimates of $1.32/$1.43, respectively.
Shares of American Eagle Outfitters closed at $18.40 yesterday.
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