American Eagle Outfitters, Inc. operates as a multi-brand specialty retailer in the United States and internationally. The company provides jeans, apparel and accessories, and personal care products for women and men under the American Eagle brand; and intimates, apparel, activewear, and swim collections under the Aerie and OFFLINE by Aerie brands. It also offers menswear products under the Todd Snyder New York brand; and fashion clothing and accessories under the Unsubscribed brand. The company sells its products through own and licensed retail stores; concession-based shops-within-shops; and digital channels, such as www.ae.com, www.aerie.com, www.toddsnyder.com, and www.unsubscribed.com. American Eagle Outfitters, Inc. was founded in 1977 and is headquartered in Pittsburgh, Pennsylvania.

American Eagle Outfitters appears to be a company with decent operating profitability, but with noticeable pressure on earnings and liquidity. The valuation at a P/E of 10.75 and a P/S of 0.54 looks below the industry median, which supports the case for an inexpensive stock; however, a P/B of 3.00 and a P/FCF of 16.83 are already above the median, so the discount does not look unequivocal. Return on capital is strong: ROE of 17.28%, ROA of 6.88%, and ROI of 21.16% are above the industry, indicating good quality of asset and capital use. At the same time, the operating margin of 6.07% and net margin of 4.97% are still below industry benchmarks, meaning the business is profitable but not with the best efficiency in the sector. Margin trends have generally improved compared with earlier periods, which is a positive, but the absolute profit level remains modest: net income of $24 million and operating income of $28 million look weak relative to revenue of $1.195 billion. Revenue and gross profit are growing year over year, and the gross margin remains around 38.5%, indicating resilient merchandise economics and no strong pressure on cost of sales. The balance sheet looks fairly conservative: debt/equity of 0.05 is significantly below the industry, debt is low, and the current ratio of 1.54 is acceptable. However, a quick ratio of 0.53 and cash on hand of $113 million show that immediate liquidity is not ideal and the cash cushion is limited. Dividend yield of 0.74% has declined versus prior periods, so the dividend argument for revaluation is weaker than before. Equity and assets are growing, which supports financial stability, but liabilities are also rising and require monitoring. Overall, the fundamentals support a moderately positive but not aggressive view: the company does not look troubled, but weak EPS, margins, and liquidity limit the potential for a significant increase in the target price. For an investor, this is more of a story about stability and modest undervaluation in terms of multiples than about strong earnings growth over the next year.

American Eagle Outfitters, Inc.

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Средний индекс, незначительно вырос. Рынок на стороне быков.

Medium index, slightly up. The market is on the bulls' side.

Слабый индекс, незначительно вырос

Low P/E and P/S support the idea that AEO is undervalued, but weak EPS, margins, and liquidity limit the upside for a revaluation.

Key Points
American Eagle Outfitters consistently generates slightly higher revenue than Abercrombie & Fitch across most reporting periods.
Both companies exhibit a highly cyclical revenue pattern over the last eight quarters, characterized by sharp quarter-over-quarter spikes followed by immediate declines.
Investors should watch whether the slight revenue gap between the two companies continues to hold steady or begins to narrow in upcoming quarters.
American Eagle Outfitters: Navigating Brand Shifts
American Eagle Outfitters (NYSE:AEO) operates as a fashion and lifestyle retail enterprise offering clothing, accessories, and personal care items primarily under its American Eagle and Aerie labels.
While it recently initiated a phased shutdown of its third-party logistics business, it reported an approximately 2% net income margin for the quarter ended May 2, 2026.
Abercrombie & Fitch: Expanding Physical Footprints
Abercrombie & Fitch (NYSE:ANF) operates as an omnichannel retailer selling apparel and accessories for men, women, and kids across several brands, including Hollister.
It opened a new flagship store in New York in June 2026, and it recorded an approximately 6% net income margin for the quarter ended May 2, 2026.
Why Revenue Matters for Retail Investors
Revenue here refers to the data provider's standardized income-statement revenue line item, and tracking this top-line figure helps investors evaluate the overall size and sales trajectory of a business.
Quarterly Revenue for American Eagle Outfitters and Abercrombie & Fitch
Quarter (Period End)
American Eagle Outfitters Revenue
Abercrombie & Fitch Revenue
Q3 2024 (Aug. 2024)
$1.3 billion
$1.1 billion
Q4 2024 (Nov. 2024)
$1.3 billion
$1.2 billion
Q1 2025 (Feb. 2025)
$1.6 billion
$1.6 billion
Q2 2025 (May 2025)
$1.1 billion
$1.1 billion
Q3 2025 (Aug. 2025)
$1.3 billion
$1.2 billion
Q4 2025 (Nov. 2025)
$1.4 billion
$1.3 billion
Q1 2026 (Jan. 2026)
$1.8 billion
$1.7 billion
Q2 2026 (May 2026)
$1.2 billion
$1.1 billion
Foolish Take
Investing in consumer goods companies like American Eagle and Abercrombie means making a bet on those companies’ products as well as its management team. Revenue trends can indicate things like a company’s pricing power, product demand, and brand loyalty. It’s up to management to effectively manage other components of the business, like logistics, marketing, and operating costs.
The revenue chart above tells a few stories: one about American Eagle and Abercrombie, and another about the clothing niche within the broader consumer discretionary category. For both companies, the first quarter of the year is the big moneymaker — that quarter includes the holiday shopping period, so it’s an essential time for businesses to record strong revenue numbers. Similarly, Q2 is historically the weakest quarter, as shoppers adjust their spending and retailers pull back on their marketing campaigns. Despite the apparent pullback, this is typically what investors want to see. A weak first quarter in the retail world could indicate waning consumer interest or a loss of pricing power due to too many promotions.
Both companies appear to be delivering steady, reliable revenue performance, but neither is in high-growth mode. That’s something to watch for. It’s also important to pay attention to other parts of the balance sheet. For example, while Abercrombie’s revenue numbers consistently lag American Eagle’s, its 6% net income margin means Abercrombie is generating more profit from every dollar of revenue, suggesting it’s a slightly more efficient business. If Abercrombie can narrow the revenue gap with American Eagle while maintaining a larger net profit margin, it may be the stronger bet here.
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Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool recommends Abercrombie & Fitch and American Eagle Outfitters. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

American Eagle Outfitters vs. Abercrombie & Fitch: How Smart Investors Read Retail Revenue Trends

In trading on Wednesday, apparel stores shares were relative leaders, up on the day by about 3.7%. Leading the group were shares of Torrid Holdings, up about 9.8% and shares of American Eagle Outfitters up about 7.8% on the day.
Also showing relative strength are textiles shares, up on the day by about 3% as a group, led by Under Armour, trading higher by about 6.9% on Wednesday.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Wednesday Sector Leaders: Apparel Stores, Textiles

American Eagle Outfitters, Inc. AEO, a prominent player in the retail apparel and shoes sector, is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 8.94X, which is lower than the industry’s average P/E of 14.42X. The stock also trades below its one-year median P/E ratio of 12.23X, which suggests that AEO is currently trading at an attractive valuation compared to its historic valuation.
American Eagle’s Valuation Picture
Image Source: Zacks Investment Research
AEO’s attractive valuation is particularly noticeable compared with peers such as Tapestry, Inc. TPR, Fossil Group, Inc. FOSL and Urban Outfitters, Inc. URBN, which have P/E ratios of 18.37X, 26.99X and 10.73X, respectively.
However, American Eagle has seen its shares plunged 37% in the past six months, underperforming the Zacks industry’s decline of 9.8%. The stock has also underperformed the broader sector’s 6% decline and the S&P 500 Index’s 7.5% growth in the same period.
AEO Stock’s 6-Month Performance
Image Source: Zacks Investment Research
Closing at $16.32 in the last trading session, American Eagle stock stands 42.7% below its 52-week high of $28.46 reached on Jan 06, 2026. AEO is trading below its 50-day simple moving average of $16.90 and 200-day simple moving average of $19.53, indicating a weak technical setup.
AEO Trades Below 200 & 50-Day SMA
Image Source: Zacks Investment Research
AEO Stock Pressured by Higher Costs and Macro Uncertainty
American Eagle continues to face several near-term headwinds from a challenging operating environment, higher operating costs and tariff-related pressures. The company is also facing additional pressure from import tariffs. Management expects an incremental tariff headwind of approximately $20 million in the second quarter of fiscal 2026 compared with the prior year. The planned tariff rate on imports is expected to remain at 10% in the fiscal second quarter before increasing to 15% for the remainder of the year, creating further pressure on profitability.
The company’s SG&A expenses increased 11% in the first quarter of fiscal 2026, primarily due to planned advertising investments, while interest expense rose following the sale of a portion of the company’s tariff claims. Looking ahead, management expects SG&A expense growth to accelerate to the mid-teens in the second quarter as advertising investments continue, keeping operating expenses elevated in the near term.
Product-related challenges also affected first-quarter performance. Management noted that women’s bottoms, particularly denim, underperformed expectations and were the primary driver of weaker American Eagle sales. The company attributed this to the need to refine its product assortment toward more relevant styles and fits, while colder-than-normal spring weather reduced demand across several seasonal categories. Despite these challenges, management remains focused on improving execution and enhancing product productivity in areas within its control.
How Have Estimates Shaped Up for AEO?
The Zacks Consensus Estimate for AEO’s current quarter earnings per share have been revised down by a penny to 21 cents in the past 30 days. The earnings estimate for fiscal 2026 have been moved down by a penny to $1.76 per share in the past seven days.
Image Source: Zacks Investment Research
American Eagle Strengthens Long-Term Growth Strategy
Despite near-term challenges, American Eagle’s long-term growth drivers remain intact, supporting customer engagement and brand visibility. The company is investing in its brands and operational capabilities, including its West Coast distribution center in Phoenix to optimize the supply chain and improve product availability.
AEO is also emphasizing higher-margin sales through a more disciplined promotional strategy while expanding its digital capabilities with TikTok Shop, the AE Creator Community and increased digital marketing investments. The company’s customer engagement remains strong, with its customer file exceeding 19 million. Additionally, management views OFFLINE as a significant long-term growth opportunity alongside the continued strength of the Aerie brand.
How to Play AEO Stock?
American Eagle’s discounted valuation may appeal to value-oriented investors, particularly given its pricing relative to both historical levels and industry peers. However, the recent weakness in the stock, coupled with subdued earnings expectations and a weak technical setup, suggests that near-term challenges remain. While the valuation appears compelling, investors may prefer to wait for clearer signs of operational improvement and earnings stability before turning more constructive on the stock.
At present, AEO carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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American Eagle's Valuation Looks Cheap: Buy Now or Stay Cautious?

American Eagle Outfitters, Inc. AEO, a prominent player in the retail apparel and shoes sector, has seen its shares plunge 35.1% in the past six months, underperforming the Zacks industry’s decline of 7.8%. The stock has also underperformed the broader sector’s 1.4% decline and the S&P 500 Index’s 9.5% increase in the same period.
AEO Stock’s 6-Month Performance
Image Source: Zacks Investment Research
In the same period, American Eagle has trailed the performance of Tapestry, Inc. TPR, Fossil Group, Inc. FOSL and Urban Outfitters, Inc. URBN. Shares of TPR and FOSL have gained 11.6% and 11%, respectively, in the past six months, while shares of URBN have lost 6.6%.
AEO’s Share Price Performance VS Peers
Image Source: Zacks Investment Research
AEO Stock Falls on Rising Costs & Macroeconomic Uncertainty
American Eagle faces several near-term headwinds stemming from a challenging macroeconomic environment, rising operating costs and tariff-related uncertainty. The company continued to experience cost pressures in the first quarter of fiscal 2026, with SG&A expenses increasing 11% due to planned advertising investments. Interest expense also increased following a transaction involving the sale of a portion of its tariff claims.
Looking ahead, management expects growth of the SG&A expenses to accelerate to the mid-teens in the fiscal second quarter, primarily due to continued advertising investments, which are likely to keep operating expenses elevated in the near term.
Product-related challenges also weighed on performance in the quarter. Management highlighted that women’s bottoms, particularly denim, underperformed expectations and were the primary contributor to the decline in American Eagle sales. Performance was affected by the need to refine the product assortment toward more relevant styles and fits, while a colder-than-normal spring reduced demand across several seasonal categories. Although these factors pressured results, management remains focused on improving execution and enhancing product productivity in areas within its control.
The company is also facing meaningful cost pressures from import tariffs. For the fiscal second quarter, American Eagle expects an incremental tariff headwind of approximately $20 million compared with the prior year. The planned tariff rate on imports is expected to remain at 10% in the fiscal second quarter before increasing to 15% for the remainder of the year, creating an additional drag on profitability.
More broadly, management noted that the retail environment remains highly dynamic and continues to be shaped by macroeconomic uncertainty. Softer consumer demand in women's bottoms, tariff-related cost inflation and unfavorable seasonal conditions contributed to a more challenging operating environment in the first quarter and are expected to remain near-term headwinds.
American Eagle Invests in Marketing, Digital and Brand Partnerships
Despite near-term challenges, American Eagle continues to benefit from several long-term growth drivers that support customer engagement, traffic and brand visibility. The company remains committed to investing in its brands and operational capabilities where it expects the highest returns. As part of this strategy, AEO opened its West Coast distribution center in Phoenix in early May to further optimize its supply chain and improve inventory placement. Management believes the new facility will enhance product availability while giving customers greater flexibility in how and when they receive their purchases.
The company has also successfully shifted away from broad-based promotional activity toward a more disciplined commercial strategy focused on profitable growth. Management emphasized that this approach prioritizes higher-margin sales and more targeted promotions rather than widespread discounting. By improving promotional discipline, AEO aims to enhance the quality of revenue while building a more sustainable, margin-focused operating model.
Customer engagement remains strong, supported by American Eagle’s marketing initiatives and strategic brand partnerships. The company’s customer file expanded to more than 19 million, representing 3% year-over-year growth, reflecting continued brand relevance and customer loyalty. Digital innovation and social commerce also remain key priorities.
AEO recently launched a dedicated TikTok Shop and the AE Creator Community to engage its core demographic through more authentic and timely content. In addition, the company is reallocating marketing investments toward digital media, performance marketing and influencer partnerships to drive higher-converting traffic and shift its focus from broad brand awareness to customer conversion.
How Have Estimates Shaped Up for AEO?
The Zacks Consensus Estimate for AEO’s current quarter and the current year earnings per share has remained unchanged at 21 cents and $1.77, respectively, in the past seven days.
Image Source: Zacks Investment Research
American Eagle is currently trading at a forward 12-month P/E multiple of 9.43X, lower than the industry average of 14.68X and well below the S&P 500 multiple of 21.13X. The stock is also trading below its 12-month median P/E of 12.29X, reflecting potential undervaluation.
American Eagle’s Valuation Picture
Image Source: Zacks Investment Research
How to Play AEO Stock?
American Eagle is navigating macroeconomic challenges, tariff-related uncertainty and rising cost pressures, which may temper near-term performance. However, the company continues to benefit from digital innovation and strategic collaborations, which provide additional avenues for long-term growth. Given the balance between near-term headwinds and long-term growth opportunities, investors may prefer to remain on the sidelines until there is greater visibility into the pace of growth.
At present, AEO carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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How to Play American Eagle Stock After a 35% Plunge in 6 Months?

American Eagle Outfitters, Inc. AEO delivered a strong first-quarter fiscal 2026 performance, with Aerie remaining the primary growth driver, delivering exceptional results across both sales channels and profitability. The company’s revenues increased 10% year over year to $1.2 billion, and operating income reached $28 million, exceeding management’s guidance. Total Aerie sales increased 34%, while comparable sales rose 25%, reflecting broad-based growth across channels and reinforcing the brand’s continued momentum within the company’s portfolio.
Aerie surpassed the $2 billion milestone in trailing 12-month revenue, reflecting years of disciplined execution, sustained brand building and deep customer engagement. In the first quarter of fiscal 2026, both the Aerie and OFFLINE brands generated strong customer response, supported by compelling products, impactful marketing and well-aligned sales channels.
Aerie delivered broad-based strength across key categories, led by a 45% comparable sales increase in apparel. Management also credited its head-to-toe merchandising strategy across intimates, sleepwear and apparel for simplifying customers’ outfit choices while increasing basket size and average order value, reinforcing the brand’s repeatable growth model.
The company continued to strengthen its commercial and brand strategy by replacing brand-wide promotions with a more disciplined, higher-margin approach centered on targeted promotions, always-on pricing and marketing investments to attract and retain high-value customers.
At the same time, American Eagle enhanced Aerie’s brand visibility through its 100% Aerie Real campaign featuring Pamela Anderson, reinforcing the brand’s commitment to inclusivity, authenticity and transparency while deepening customer engagement. Looking ahead, Aerie is projected to maintain momentum with comparable sales growth in the high-teens to low 20% range in the fiscal second quarter of 2026.
Aerie’s sustained performance underscores its evolution into a powerful long-term value creator for American Eagle. With a scalable business model and strong brand resonance, the company appears well-positioned to deliver consistent earnings growth and strengthen its competitive position over time.
The Zacks Rundown for AEO
AEO’s shares have surged 87.6% in the past year compared with the industry’s growth of 10.7%. AEO carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, AEO trades at a forward price-to-earnings ratio of 9.91X, lower than the industry’s average 15.14X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AEO’s current and next fiscal year earnings implies a year-over-year growth of 18% and 7.5%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
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Tapestry, Inc. TPR provides accessories and lifestyle brand products in North America, Greater China, the rest of Asia, and internationally. At present, TPR flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TPR’s current fiscal-year sales and earnings implies growth of 13.8% and 36.3%, respectively, from the year-ago figures. TPR has delivered a trailing four-quarter earnings surprise of 15.6%, on average.
Urban Outfitters, Inc. URBN offers lifestyle products and services in the United States and internationally. At present, URBN carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for URBN’s current fiscal-year sales and earnings implies growth of 8.6% and 10.5%, respectively, from the year-ago figures. URBN has delivered a trailing four-quarter earnings surprise of 12.2%, on average.
Fossil Group, Inc. FOSL designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. At present, FOSL carries a Zacks Rank of 2.
The Zacks Consensus Estimate for FOSL’s current fiscal-year sales indicates a decline of 4.9%, while the same for earnings indicates growth of 87.6% from the year-ago figures. FOSL delivered a trailing four-quarter negative earnings surprise of 381.8%, on average.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

American Eagle's Growth Is Driven by Aerie's Strong Performance

Key Points
American Eagle Outfitters maintains a strong foothold in the youth apparel market through its namesake and Aerie brands.
Pool dominates the global wholesale distribution of swimming pool supplies and outdoor living products.
Investors face a choice between the high-energy fashion world and the steady demand for home maintenance. Deciding between American Eagle Outfitters (NYSE:AEO) and Pool (NASDAQ:POOL) involves weighing apparel trends against outdoor leisure cycles.
American Eagle Outfitters is a specialty apparel giant focused on youth brands, while Pool serves as a vital wholesale link in the global swimming pool market. Both companies cater to discretionary spending, but their business models and growth drivers differ significantly. This comparison evaluates their financials and risks to see which stock is a better fit for 2026.
The case for American Eagle Outfitters
American Eagle Outfitters operates as a specialty retailer offering apparel, accessories, and personal care products through its American Eagle and Aerie brands. The company manages over 1,100 stores across North America and Asia while reaching dozens of other countries through licensing and digital channels. Among retail stocks, its recent move to close the Quiet Platforms business signifies a strategic shift back to its core brand strengths.
In fiscal 2025 (which ends in January), the company generated revenue exceeding $5.5 billion, up about 4% over the previous year. It’s turning a profit, with net income of $185 million, though the net margin decreased to roughly 3.5% from 6.2% in the prior year. This trend suggests that while sales are expanding, higher costs or pricing pressures may be impacting the bottom line.
According to its January 2026 balance sheet, the debt-to-equity ratio is approximately 0.8x. This metric compares a company's total debt to its shareholder equity to help investors understand its financial leverage. The company maintained a current ratio of roughly 1.5x, which measures its ability to cover short-term liabilities, and generated free cash flow of nearly $195 million during the year.
The case for Pool
Pool is the world’s largest wholesale distributor of swimming pool supplies and outdoor living products. With approximately 455 locations globally, the company serves a professional customer base, including pool builders, remodelers, and independent retail specialty stores. This business model relies on both the initial construction of new pools and the recurring maintenance needs of existing pool owners.
For 2025, the company reported revenue of nearly $5.3 billion, a slight decrease of roughly 0.4% from the prior fiscal year. Net income was $406 million, resulting in a net margin of close to 7.7%. While revenue growth was flat, the company has maintained a higher net margin compared to many other distributors in the consumer space.
As of the December 2025 balance sheet, the debt-to-equity ratio is roughly 1.2x. The current ratio is approximately 2.2x, indicating a strong capacity to pay off short-term debts with its current assets. Free cash flow was $309 million, providing the company with capital to continue its acquisition and dividend payment strategies.
Risk profile comparison
American Eagle Outfitters faces significant macroeconomic risks, as inflation and interest rate volatility can quickly dampen discretionary consumer spending. The company is also vulnerable to supply chain disruptions and trade policy changes, particularly following the February 2026 court rulings on tariffs. Furthermore, it must compete with e-commerce players and numerous apparel brands, which places constant pressure on pricing and digital innovation.
Pools are highly dependent on the housing market and the general state of the economy, as new pool construction is a major ticket expense for homeowners. While maintenance provides a recurring revenue stream, prolonged recessions can lead consumers to defer luxury upgrades or repairs. The company also faces competition from regional distributors and specialty retailers, which can affect its market share and pricing power in key geographic regions.
Valuation comparison
American Eagle Outfitters shares are less expensive based on earnings and sales than those of its industry peers. Yet Pool is also trading at a discounted forward earnings multiple relative to its competitors. Both stocks could be undervalued right now.
Forward P/E
10.1x
18.0x
28.6x
P/S ratio
0.5x
1.4x
n/a
Sector benchmark uses the SPDR XLY sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
It hasn’t been a strong macroeconomic environment for either business. Despite a weak sales backdrop, American Eagle has posted sales growth for three consecutive years, a testament to a well-managed apparel business. On the other side, Pool has experienced inconsistent top-line performance.
However, investors shouldn’t be persuaded by recent results. Pool has better long-term growth prospects once the housing market recovers. American Eagle faces intense competition from numerous apparel brands, but Pool has a more durable moat due to its scale and highly efficient distribution network.
As the leader in outdoor products, Pool is a solid business. New home construction provides the company with a steadily expanding addressable market. However, Pool is not only reliant on selling new pool units. It can also generate revenues through maintenance and remodeling projects.
When the housing market recovers, Pool stock could rebound sharply, as it is trading at 66% below its previous highs. The combination of industry leadership and expansion potential from housing market growth makes Pool a better long-term growth stock to hold.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pool. The Motley Fool recommends American Eagle Outfitters. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

American Eagle Outfitters vs. Pool: Which Consumer Stock Is a Better Buy in 2026?

American Eagle Outfitters, Inc. AEO is positioning its digital strategy for sustainable growth by shifting toward social commerce and performance-driven marketing. While the American Eagle (AE) brand's digital performance was flat earlier in the first quarter of fiscal 2026, management highlighted that the AE brand experienced a significant acceleration in digital channel performance and continues to be an important contributor to overall brand performance. In contrast, Aerie has maintained growth across all its digital and physical channels.
Digital innovation and social commerce are also central to AEO’s approach. The company recently launched a dedicated TikTok shop and the AE creator community to engage with its core demographic in a more immediate and relevant way. Additionally, AEO is recalibrating its marketing investments, shifting more spend toward digital media, performance marketing and influencer programs. This rebalancing is intended to drive traffic with a higher propensity to convert, specifically moving from broad brand awareness to active conversion.
Management indicated that marketing investments in the second half of the year will be more heavily focused on digital media, performance marketing, influencer partnerships and other day-to-day traffic-driving initiatives. The company believes this approach can support stronger conversion outcomes, as traffic generated through these channels tends to have a higher likelihood of converting into customers. The strategy reflects a greater emphasis on performance-oriented marketing and measurable customer acquisition efforts.
American Eagle strengthened brand visibility through its 100% Aerie Real campaign featuring Pamela Anderson and a series of strategic collaborations, including partnerships with Bubble Skincare and Prime Video’s Off Campus. These initiatives have increased brand awareness and consumer consideration, while the company remains focused on converting engagement into sales through social commerce, performance marketing and digital channels. Overall, AEO’s focus on social commerce, performance marketing and digital engagement should support stronger conversions and sustainable long-term growth.
The Zacks Rundown for AEO
AEO’s shares have surged 83% in the past year compared with the industry’s growth of 11%. AEO carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, AEO trades at a forward price-to-earnings ratio of 9.74X, lower than the industry’s average 15.10X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AEO’s current and next fiscal year earnings implies a year-over-year growth of 18% and 7.5%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
Tapestry, Inc. TPR provides accessories and lifestyle brand products in North America, Greater China, the rest of Asia, and internationally. At present, TPR flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TPR’s current fiscal-year sales and earnings implies growth of 13.8% and 36.3%, respectively, from the year-ago figures. TPR has delivered a trailing four-quarter earnings surprise of 15.6%, on average.
Levi Strauss & Co. LEVI designs, markets, and sells apparel and related accessories for men, women, and children in the United States and internationally. At present, LEVI carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for LEVI’s current fiscal-year sales and earnings implies growth of 5.2% and 11.9%, respectively, from the year-ago figures. LEVI has delivered a trailing four-quarter earnings surprise of 21.4%, on average.
Fossil Group, Inc. FOSL designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. At present, FOSL carries a Zacks Rank of 2.
The Zacks Consensus Estimate for FOSL’s current fiscal-year sales indicates a decline of 4.9%, while the same for earnings indicates growth of 87.6% from the year-ago figures. FOSL delivered a trailing four-quarter negative earnings surprise of 381.8%, on average.
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Can American Eagle's Digital Strategy Deliver Sustainable Growth?

Key Points
American Eagle Outfitters maintains a strong foothold in the young adult market with its core brand and high-growth Aerie label.
Chewy is expanding beyond its core retail business into high-margin pet health services and veterinary clinics.
Which consumer-focused stock is the more resilient choice for your portfolio in 2026?
Choosing between a traditional apparel retailer and a digital-first pet supplier requires a look at how each company handles shifting consumer habits. American Eagle Outfitters (NYSE:AEO) and Chewy (NYSE:CHWY) represent two different paths in the retail landscape.
American Eagle Outfitters focuses on brand loyalty through physical stores and fashion trends, while Chewy leverages a recurring subscription model to dominate the pet care space. Investors often compare them to see which business model offers better stability during periods of economic uncertainty.
The case for American Eagle Outfitters
American Eagle Outfitters operates as a global specialty retailer focused on the American Eagle and Aerie brands. The company is a prominent name among apparel stocks, focusing heavily on teen and young adult demographics through its 1,168 company-owned stores. Its strategy recently shifted to focus on core brand profitability after closing its Quiet Platforms third-party fulfillment business in fiscal 2025.
In FY 2025, the company reported revenue of nearly $5.5 billion, up approximately 3.2% from the previous year. Net income for the period reached $192.0 million, resulting in a net margin of roughly 3.5%. This was a decrease from the 6.2% net margin recorded in the prior fiscal year, reflecting a more challenging environment for discretionary spending.
As of its January 2026 balance sheet, the company maintains a debt-to-equity ratio of 1.0x. This ratio measures total debt relative to shareholder equity, indicating how much a business relies on borrowing to fund its operations. The current ratio, which measures the ability to cover short-term debts with assets like cash and inventory, is roughly 1.5x, and the company generated free cash flow of approximately $195.4 million.
The case for Chewy
Chewy has built a massive digital presence by offering pet parents a convenient way to shop for food, medications, and supplies. The company relies heavily on its Autoship program, which provides recurring revenue by automatically sending products to customers on a set schedule. In April 2026, the company expanded its physical footprint by acquiring Modern Animal, a move intended to grow its network of veterinary clinics to 47 locations.
During FY 2025, Chewy saw its revenue grow by roughly 6.2% to reach nearly $12.6 billion. Despite this top-line growth, the company reported net income of approximately $222.8 million, corresponding to a net margin of 1.8%. This net margin was lower than the 3.3% achieved in the prior year, as the company invested in expanding its veterinary services and health infrastructure.
Based on the February 2026 balance sheet, Chewy carries a debt-to-equity ratio of approximately 1.1x. Its current ratio of 0.9x suggests that short-term liabilities slightly exceed short-term assets, a common pattern for retailers with high inventory turnover. The company generated free cash flow of nearly $562.4 million, though stock-based compensation accounted for roughly 43.1% of operating cash flow, inflating reported cash generation since SBC is a non-cash expense added back in the cash flow statement.
Risk profile comparison
American Eagle Outfitters faces significant risks from a new 10% global tariff that took effect in late February 2026. This policy creates uncertainty regarding merchandise costs and could strain supply chain stability if trade tensions escalate. Furthermore, the company remains sensitive to inflation, which often causes customers to pull back on clothing purchases in favor of essential goods.
Chewy must contend with intense competition from massive retailers like Amazon (NASDAQ:AMZN) and Walmart (NASDAQ:WMT), which offer similar pet products and fast shipping. The company also faces corporate governance risks, as BC Partners retains significant voting power that could create conflicts of interest with minority shareholders. Additionally, its expansion into the veterinary sector requires strict adherence to evolving healthcare regulations, which could lead to fines if compliance is not maintained.
Valuation comparison
American Eagle Outfitters trades at a much lower forward P/E than Chewy, though both companies share a low P/S ratio.
Forward P/E
10.3x
23.0x
29.6x
P/S ratio
0.6x
0.6x
Sector benchmark uses the SPDR XLY sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
It’s interesting to compare two retail businesses that have completely different products and markets. One of these two depends on fashion trends and consumer discretionary spending. The other benefits from pet owners' recurring purchases. Which business is more resilient and likely to provide the best long-term investment?
American Eagle Outfitters is a well-established brand with a loyal following. It has delivered revenue growth and pays a regular dividend to its shareholders. It also trades at a low valuation relative to its earnings. But the apparel market is intensely competitive, and when consumer spending wanes, so do companies’ margins.
Chewy sells pet food, supplies, and healthcare products – including prescription medications -- and has been expanding into veterinary care. Its autoship program is a lever for customer loyalty and recurring purchases. While many of Chewy’s products fall under the discretionary purchases category, pet owners will always spend on pet food and medications even in a weak economy. Chewy’s valuation is higher than AE’s, but the business is generally more predictable.
Both stocks are attractive to investors. They both are profitable, with loyal customers and strong market share. But I would choose Chewy because I believe its business model is resilient and diversified, and it appears better positioned to deliver long-term growth.
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Pamela Kock has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Chewy, and Walmart. The Motley Fool recommends American Eagle Outfitters. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

American Eagle Outfitters vs. Chewy: Which Consumer Stock Is a Better Buy in 2026?

American Eagle Outfitters, Inc.’s AEO Aerie banner continues to stand out as a major growth engine, benefiting from strong customer engagement, compelling product offerings and effective marketing initiatives. The brand’s focus on comfort, authenticity and lifestyle categories has helped it deepen connections with consumers, enabling it to gain market share in a competitive retail environment. Management remains optimistic about Aerie’s long-term prospects as it continues to broaden brand awareness and strengthen customer loyalty.
In first-quarter fiscal 2026, Aerie delivered another impressive performance, with revenues surging 34% year over year to $481 million and comparable sales rising 25%. On a trailing 12-month basis, the brand surpassed the $2 billion revenue milestone. Strength was broad-based across channels and categories, with Aerie apparel comps jumping 45%, while intimates posted high-single-digit growth. The company noted that higher traffic, better conversion, increased average unit retail and larger basket sizes all contributed to the banner’s exceptional results.
Several strategic initiatives have been driving this outperformance. Aerie’s head-to-toe merchandising approach across apparel, intimates and sleepwear has boosted average order values and encouraged repeat purchases. Marketing efforts, including the 100% Aerie Real campaign featuring Pamela Anderson and the company’s commitment to avoiding AI-generated imagery, have resonated strongly with customers. Additionally, the Aerie Real Makers influencer program exceeded its six-month targets within weeks, helping attract new shoppers while increasing engagement among existing customers.
Looking ahead, management believes Aerie and its OFFLINE activewear business have a significant runway for continued growth. OFFLINE has emerged as an important long-term opportunity, supported by strong demand for matching sets and new fabrications, and has already become the No. 2 legging brand among its core demographic. Although competition remains intense, AEO’s disciplined promotional strategy, continued investments in marketing and strong customer loyalty position Aerie well to sustain its momentum and remain a key contributor to the company’s overall growth.
AEO’s Price Performance, Valuation & Estimates
American Eagle’s shares have surged 83.1% in the past year compared with the industry’s 15.3% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, AEO trades at a forward price-to-earnings ratio of 9.65X compared with the industry’s average of 15.74X.
Image Source: Zacks Investment Research
AEO stock currently carries a Zacks Rank #3 (Hold).
Key Picks
Ross Stores ROST, a leading U.S. off-price retailer operating Ross Dress for Less and dd's DISCOUNTS stores, sports a Zacks Rank #1 (Strong Buy) at present. ROST delivered a trailing four-quarter earnings surprise of 10.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Ross Stores’ current fiscal-year sales and earnings suggests growth of 9.1% and 17.1%, respectively, from the year-ago figures.
Five Below, Inc. FIVE, which operates as a specialty value retailer, currently flaunts a Zacks Rank #1. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings suggests growth of 14.3% and 30.4%, respectively, from the year-ago figures.
Tapestry, Inc. TPR provides accessories and lifestyle brand products in North America, Greater China, the rest of Asia and internationally. At present, TPR sports a Zacks Rank of 1.
The Zacks Consensus Estimate for current fiscal-year sales and earnings implies growth of 13.8% and 36.3%, respectively, from the year-ago reported figures. TPR has delivered a trailing four-quarter earnings surprise of 15.6%, on average.
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AEO's Aerie Comp Sales Rise 25%: What's Driving Outperformance?

The S&P 500 Index ($SPX) (SPY) on Friday closed up +0.22%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.72%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.36%. June E-mini S&P futures (ESM26) rose +0.19%, and June E-mini Nasdaq futures (NQM26) rose +0.31%.
Stock indexes settled higher on Friday, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs. Stocks are supported by prospects for a peace deal in the Middle East, which are easing pressure on crude oil prices and reducing inflation concerns. Also, evidence of relentless demand for AI-infrastructure upgrades is pushing technology stocks higher, led by a 32% surge in Dell Technologies on Friday after it gave a sales outlook that far surpassed analysts’ estimates.
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The markets are awaiting President Trump’s approval of a preliminary deal between the US and Iran to extend a ceasefire by 60 days and reopen the Strait of Hormuz. President Trump said Friday he's making a "final determination" on a preliminary deal to extend a ceasefire with Iran.
Friday’s US economic news showed strength in the economy that is positive for stocks. The May MNI Chicago PMI rose +13.5 to 62.7, stronger than expectations of 50.3 and the strongest pace of expansion in 4.25 years.
Fed comments on Friday were mixed for stocks and bonds. On the positive side, San Francisco Fed President Mary Daly said Fed interest rate policy is in a good place and that she's "cautiously optimistic" about the US economy, noting that "there's no urgency to make an adjustment" to interest rates. Also, Minneapolis Fed President Neel Kashkari said, "I think it's premature for me to conclude we need to be raising rates right away and that we need to keep watching the data and watching how the conflict in the Middle East unfolds before I want to make any adjustments."
On the negative side, Kansas City Fed President Jeff Schmid said, "With inflation running above the Fed's 2% definition of price stability or over five years, now is not the time to let down our guard, and we must continue to signal our commitment to price stability and our willingness to take the actions necessary to achieve our mandate."
Crude oil prices fell more than -1% on Friday to a 5-week low as the US and Iran tentatively agreed to extend a ceasefire by 60 days, fueling optimism that the Strait of Hormuz may soon reopen. Even if a truce extension is agreed, several hurdles remain before crude flows can resume. Among them, mines in the Hormuz waterway must be removed, shut-in oil fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired.
The markets are discounting a 2% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.
The generally favorable Q1 earnings season is winding down. As of Friday, 84% of the 485 S&P 500 companies that reported Q1 earnings have beaten estimates. Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence. Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.
Overseas stock markets settled mixed on Friday. The Euro Stoxx 50 closed down -0.08%. China's Shanghai Composite closed down -0.73%. Japan's Nikkei Stock Average rallied to a new record high and closed up +2.53%.
Interest Rates
June 10-year T-notes (ZNM6) on Friday closed up +1 tick. The 10-year T-note yield rose +0.2 bp to 4.449%. Friday’s decline in WTI crude oil prices to a 5-week low eased inflation expectations and supported modest gains in T-notes. Also, bond dealer short covering was supportive of T-note prices as dealers covered their short positions placed against T-notes to hedge against the Treasury’s $215 billion T-note auctions over this past week.
Gains in T-notes were limited after the May MNI Chicago PMI rose more than expected at the strongest pace in 4.25 years. Also, Friday’s rally in the S&P 500 to a new record high reduced safe-haven demand for T-notes.
European government bond yields moved lower on Friday. The 10-year German Bund yield fell -2.4 bp to 2.938%. The 10-year UK gilt yield fell -0.2 bp to 4.812%.
German May CPI (EU harmonized) fell -0.1% m/m and rose +2.7% y/y, weaker than expectations of unchanged m/m and +2.8% y/y.
The German May unemployment change unexpectedly fell by -12,000, showing a stronger labor market than expectations of a +10,000 increase. The May unemployment rate unexpectedly fell -0.1 to 6.3%, showing a stronger labor market than expectations of no change at 6.4%.
ECB Governing Council member Fabio Panetta signaled his support for an ECB rate hike, saying, "The forward-looking picture system seems to call for a recalibration of the monetary policy stance to counter the risk of persistent inflationary tensions."
ECB Governing Council member Gediminas Simkus said he's likely to support an ECB rate hike in June and "a second rate hike is more likely than not."
Swaps are discounting an 89% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
Software stocks rallied on Friday, as Atlassian Corp (TEAM) closed up more than +15%, ServiceNow (NOW) closed up more than +13%, and International Business Machines (IBM) closed up more than +12% to lead gainers in the Dow Jones Industrials. Also, Workday (WDAY) closed more than +11% to lead gainers in the Nasdaq 100, and Oracle (ORCL) closed up more than +10%. In addition, Datadog (DDOG) and Palantir Technologies (PLTR) closed up more than +9%, and Salesforce (CRM) closed up more than +8%. Finally, Adobe Systems (ADBE) closed up more than +7%, and Microsoft (MSFT) and Intuit (INTU) closed up more than +5%.
Okta (OKTA) closed up more than +30% to lead cybersecurity stocks higher after reporting Q1 adjusted EPS of 91 cents, above the consensus of 85 cents, and raising its 2027 adjusted EPS forecast to $3.79 to $3.87 from a previous estimate of $3.74 to $3.82, better than the consensus of $3.78. Also, Palo Alto Networks (PANW) closed up more than +9%, and CrowdStrike Holdings (CRWD) closed up more than +8%. In addition, Zscaler (ZS) closed up more than +7%, and Cloudflare (NET) and Fortinet (FTNT) closed up more than +6%.
AI-infrastructure stocks were stronger on Friday, providing support to the broader market. Micron Technology (MU) and ARM Holdings Plc (ARM) closed up more than +5%, and Broadcom (AVGO) closed up more than +4%. Also, Qualcomm (QCOM) and Sandisk (SNDK) closed up more than +3%.
Dell Technologies (DELL) closed up more than +32% to lead gainers in the S&P 500 after reporting Q1 total revenue of $43.84 billion, well above the consensus of $35.52 billion and raising its 2027 revenue forecast to $165 billion to $169 billion from a previous estimate of $138 billion to $142 billion, stronger than the consensus of $142.12 billion.
NetApp (NTAP) closed up more than +22% after reporting Q4 net revenue of $1.95 billion, better than the consensus of $1.87 billion, and forecasting 2027 revenue of $7.33 billion to $7.58 billion, well above the consensus of $7.20 billion.
Nextpower (NXT) closed up more than +14% after agreeing to buy Prevalon Energy for up to $365 million in cash and stock.
The Gap (GAP) closed down more than -15% after reporting Q1 comparable sales rose +2.00%, weaker than the consensus of +2.93%, and cutting its 2027 net sales estimate to +1% to +2% from a previous forecast of +2% to +3%.
American Eagle Outfitters (AEO) closed down more than -11% after reporting Q1 total comparable sales rose +8.00%, below the consensus of +8.48%.
SentinelOne (S) closed down more than -8% after reporting Q1 revenue of $276.7 million, below the consensus of $277.3 million, and forecasting Q2 revenue of $289 million to $291 million, weaker than the consensus of $292.1 million.
Clorox (CLX) closed down more than -6% to lead losers in the S&P 500 after CEO Rendle Blair said she is stepping down for health reasons.
Viasat (VSAT) closed down more than -6% after reporting Q4 revenue of $1.17 billion, weaker than the consensus of $1.19 billion.
Costco Wholesale (COST) closed down more than -3% despite reporting better-than-expected Q3 earnings after several analysts flagged moderating membership growth as a concern going forward.
Autodesk (ADSK) closed down more than -3% after several analysts said the company’s $3.6 billion purchase of MaintainX was deemed too expensive.
Earnings Reports(6/1/2026)
Credo Technology Group Holding (CRDO), Hewlett Packard Enterprise Co (HPE), Science Applications International Corp (SAIC), Smith-Midland Corp (SMID).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

American Eagle Outfitters, Inc.

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