Earnings Preview: American Eagle (AEO)

American Eagle Outfitters Inc. AEO is currently lower on the session by 2.54%, trading at $12.65. The company is scheduled to report earnings August 25th, before the bell. • Estimates The Street is looking for Q2 earnings per share of $0.13 on revenue of $653.99 million. These estimates have been lowered by $0.09 (-40.9%) over the past 90 days. The Whisper number for AEO is $0.13. • Guidance The Street is looking for Q3 EPS of $0.27 on revenue of $749.91 million. The full year 2010 estimates are $0.97 per share on revenue of $3.03 billion; FY 2011 is at $1.13 per share on revenues of $3.15 billion. • Technical Picture AEO has been consolidating between $10.00 and $20.00 for the past two years after a two year bear trend, when the stock sold off from an all-time high of $34.80 in 2007 to the $9.00 in late 2008. $10.00 remains strong historical support. As of late, the stock has been selling off once again, down from $19.50 in late-March; AEO has consolidated sideways and now regained the 50-day moving average. • Volatility Both historical volatility and implied volatility have remained elevated over the past three months after a spike higher in mid-May. Vol is now inline with December 2009 levels. Currently HI is at 39% and IV is at 50%. The front month $13.00 straddle is trading at 53.04%; the October $13.00 straddle is trading at 50.69% American Eagle Outfitters, Inc. offers on-trend clothing, accessories and personal care products. It operates under the American Eagle (AE), aerie by American Eagle, 77kids by American eagle and MARTIN+OSA (M+O) brands. As of January 30, 2010, it operated 938 American Eagle Outfitters stores in the United States and Canada, 137 aerie stand-alone stores and 28 MARTIN+OSA stores.