American Eagle Outfitters stock price (NYSE: AEO) traded 13% lower on Wednesday morning, after it posted earnings that beat analyst estimates but offered weak guidance.
The clothing retailer reported earnings per share of $0.34 and sales of $965 million, which were above Wall Street expectations of $0.31 and $939 million. While same-store sales rose 9%, American Eagle projected guidance for the next quarter that fell short of expectations.
“Driven by exceptional product, teamwork and execution, it’s gratifying to see strength throughout our business, as we capitalize on the broad appeal of our brands,” beamed the proud CEO, Jay Schottenstein. But the market clearly views it with a different lens.
Looking more broadly, the S&P Retail Sector ETF (NYSEARCA: XRT) was down 1%, as were other retailers such as Dick’s Sporting Goods (DKS), which fell 8% after an earnings miss.
In analyzing the market cycles for AEO, it appears to be completing the declining phase of its current cycle.
As it has likely reached support, we expect a near term bounce. But as the size of today’s move is ominous, we expect the bounce to fail. Our target is $20 by November.
American Eagle Outfitters (AEO) Stock Chart with Weekly Bars
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