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 выглядит как компания с неплохой операционной рентабельностью, но с неоднозначной оценкой и слабой ликвидностью. P/E на уровне 10.09 и P/S 0.51 заметно ниже медианы отрасли, что обычно указывает на недооценку, однако это частично компенсируется высоким P/FCF 23.76, который выше отрасли и намекает на более дорогой свободный денежный поток, чем кажется по прибыли. P/B 1.70 тоже ниже медианы, а это поддерживает тезис о сдержанной рыночной оценке активов и капитала. При этом ROE 17.28%, ROA 6.86% и ROI 21.16% выглядят сильными и выше отраслевых ориентиров, то есть бизнес умеет извлекать прибыль из капитала и активов лучше многих конкурентов. Маржа валовой прибыли 38.53% близка к отраслевой норме, но операционная маржа 6.07% и чистая маржа 5.02% всё ещё ниже медианы, поэтому качество прибыли нельзя назвать выдающимся. Динамика по марже и рентабельности в целом улучшилась относительно более ранних периодов, что является плюсом, но абсолютные значения прибыли и EPS остаются скромными. EPS TTM 0.14 и прогнозный EPS 0.11 заметно ниже отрасли, а это ограничивает потенциал переоценки, если рост прибыли не ускорится. Баланс выглядит консервативно по долгу: debt/equity 0.05 существенно ниже отраслевой медианы, а долгосрочный долг невелик, что снижает финансовые риски. Однако quick ratio 0.53 ниже нормы и хуже current ratio 1.54, поэтому краткосрочная ликвидность не идеальна, а денежная подушка 113 млн выглядит умеренной для бизнеса с сезонностью и цикличностью спроса. Выручка и валовая прибыль по годам в целом держатся на приемлемом уровне, но чистая прибыль и операционная прибыль остаются волатильными, что повышает осторожность в оценке. Дивидендная доходность снизилась до нуля, поэтому акционер не получает текущей поддержки через выплаты, и это убирает один из факторов спроса на акцию. В сумме фундаментал скорее поддерживает умеренно позитивный взгляд на компанию, но не настолько сильный, чтобы агрессивно повышать целевую цену: недорогие мультипликаторы и сильная отдача на капитал уравновешиваются слабой ликвидностью, низким EPS и дорогим P/FCF.

American Eagle Outfitters, Inc.

Сильный индекс, без изменений. Быки в растерянности.

Strong index, flat. The bulls are confused.

Сильный индекс, без изменений. Рынок на стороне быков.

Strong index, flat. The market is on the bulls' side.

Средний индекс, незначительно упал. Приток средств в лонги снизился, но остается положительным.

Medium index, slightly down. The inflow of funds into longs has decreased, but remains positive.

AEO выглядит недооценённой по P/E, P/S и P/B, но слабый EPS, высокий P/FCF и низкая ликвидность сдерживают потенциал переоценки.

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.

Stocks Rally on Easing Geopolitical Tensions and AI Enthusiasm

The S&P 500 Index ($SPX) (SPY) today is up +0.21%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.25%. June E-mini S&P futures (ESM26) are up +0.20%, and June E-mini Nasdaq futures (NQM26) are up +0.27%.
Stock indexes are moving higher today, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 climbing to 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, with Dell Technologies up more than +30% after giving a sales outlook that far surpassed analysts’ estimates.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
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. Vice President Vance said late Thursday that the parties are “going back and forth on a couple of language points,” including issues relating to Iran’s nuclear capabilities.
Today’s US economic news shows 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 today 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 are down more than -1% today at 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 3% 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 today, 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 are mixed today. The Euro Stoxx 50 is up +0.17%. 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) today are up +2 ticks. The 10-year T-note yield is down -0.6 bp to 4.441%. Today’s decline in WTI crude oil prices to a 5-week low is easing inflation expectations and supporting modest gains in T-notes. Also, bond dealer short covering is supportive of T-note prices as dealers cover their short positions placed against T-notes to hedge against the Treasury’s $215 billion T-note auctions this past week.
Gains in T-notes are limited after the May MNI Chicago PMI rose more than expected at the strongest pace in 4.25 years. Also, today’s rally in the S&P 500 to a new record high has reduced safe-haven demand for T-notes.
European government bond yields are moving lower today. The 10-year German Bund yield is down -1.9 bp to 2.942%. The 10-year UK gilt yield is down -1.0 bp to 4.804%.
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 a 92% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
Software stocks are rallying today, with ServiceNow (NOW) up more than +13% and Palantir Technologies (PLTR) up more than +9% to lead gainers in the Nasdaq 100. Also, International Business Machines (IBM) is up more than +9% to lead gainers in the Dow Jones Industrials, and Atlassian Corp (TEAM) is up more than +9%. In addition, Oracle (ORCL), Workday (WDAY), and Salesforce (CRM) are up more than +8%, and Datadog (DDOG) is up more than +6%. Finally, Microsoft (MSFT), Intuit (INTU), and Adobe Systems (ADBE) are up more than +4%.
Okta (OKTA) is up more than +24% 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, CrowdStrike Holdings (CRWD) is up more than +6%, and Palo Alto Networks (PANW) is up more than +6%. In addition, Cloudflare (NET), Fortinet (FTNT), and Zscaler (ZS) are up more than +3%.
Chipmakers and AI-infrastructure stocks are stronger today, providing support to the broader market. Micron Technology (MU) is up more than +4%, and Qualcomm (QCOM), ARM Holdings Plc (ARM), and Broadcom (AVGO) are up more than +2%. Also, Seagate Technology Holdings Plc (STX) and Sandisk (SNDK) are up more than +1%.
Dell Technologies (DELL) is up more than +31% 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) is up more than +27% 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) is up more than +13% after agreeing to buy Prevalon Energy for up to $365 million in cash and stock.
The Gap (GAP) is down more than -17% 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) is down more than -12% after reporting Q1 total comparable sales rose +8.00%, below the consensus of +8.48%.
SentinelOne (S) is down more than -11% 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.
Viasat (VSAT) is down more than -6% after reporting Q4 revenue of $1.17 billion, weaker than the consensus of $1.19 billion.
Costco Wholesale (COST) is down more than -4% to lead losers in the Nasdaq 100 despite reporting better-than-expected Q3 earnings after several analysts flagged moderating membership growth as a concern going forward.
Autodesk (ADSK) is down more than -4% after several analysts said the company’s $3.6 billion purchase of MaintainX was deemed too expensive.
Earnings Reports(5/29/2026)
American Woodmark Corp (AMWD), Atlantic International Corp (ATLN), Buckle Inc/The (BKE), Critical Metals Corp (CRML), Genesco Inc (GCO), Liberty Live Holdings Inc (LLYVA), Navan Inc (NAVN), Pioneer Bancorp Inc/NY (PBFS), Richtech Robotics Inc (RR), Whitestone REIT (WSR).
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.
More news from Barchart
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Stocks Supported by Middle East Peace Hopes and AI Spending

The S&P 500 Index ($SPX) (SPY) today is up +0.41%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.66%. June E-mini S&P futures (ESM26) are up +0.37%, and June E-mini Nasdaq futures (NQM26) are up +0.66%.
Stock indexes are moving higher today, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 climbing to 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, with Dell Technologies up more than +30% after giving a sales outlook that far surpassed analysts’ estimates.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
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. Vice President Vance said late Thursday that the parties are “going back and forth on a couple of language points,” including issues relating to Iran’s nuclear capabilities.
Crude oil prices are down more than -1% today at 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 3% 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 today, 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 are mixed today. The Euro Stoxx 50 is up +0.29%. 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) today are up +2 ticks. The 10-year T-note yield is down -0.8 bp to 4.439%. Today’s -1% fall in WTI crude oil prices to a 5-week low is easing inflation expectations and supporting modest gains in T-notes. Also, bond dealer short covering is supportive of T-note prices as dealers cover their short positions placed against T-notes to hedge against the Treasury’s $215 billion T-note auctions this past week.
European government bond yields moved lower on Thursday. The 10-year German Bund yield is down -0.5 bp to 2.957%. The 10-year UK gilt yield is down -1.0 bp to 4.804%.
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 a 94% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
Chipmakers and AI-infrastructure stocks are stronger today, providing support to the broader market. Qualcomm (QCOM) and ARM Holdings Plc (ARM) are up more than +4%, and Intel (INTC) and Broadcom (AVGO) are up more than +3%. Also, ASML Holding NV (ASML) is up more than +2%, and Applied Materials (AMAT), KLA Corp (KLAC), Microchip Technology (MCHP), Lam Research (LRCX), and Sandisk (SNDK) are up more than +1%.
Software stocks are rallying today, with ServiceNow (NOW) up more than +9% and Oracle (ORCL) up more than +6%. Also, International Business Machines (IBM) is up more than +5% to lead gainers in the Dow Jones Industrials. In addition, Atlassian Corp (TEAM) is up more than +5%, and Datadog (DDOG) and Salesforce (CRM) are up more than +4%. In addition, Workday (WDAY) is up more than +3%, and Microsoft (MSFT) is up more than +2%. Finally, Intuit (INTU) and Adobe Systems (ADBE) are up more than +1%.
Okta (OKTA) is up more than +20% 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, CrowdStrike Holdings (CRWD) is up more than +5%, and Palo Alto Networks (PANW) is up more than +4%. In addition, Cloudflare (NET) and Fortinet (FTNT) are up more than +2%, and Zscaler (ZS) is up more than +1%.
Dell Technologies (DELL) is up more than +33% 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) is up more than +32% 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) is up more than +15% after agreeing to buy Prevalon Energy for up to $365 million in cash and stock.
The Gap (GAP) is down more than -17% 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) is down more than -13% after reporting Q1 total comparable sales rose +8.00%, below the consensus of +8.48%.
SentinelOne (S) is down more than -11% 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.
Autodesk (ADSK) is down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after several analysts said the company’s $3.6 billion purchase of MaintainX was deemed too expensive.
Viasat (VSAT) is down more than -7% after reporting Q4 revenue of $1.17 billion, weaker than the consensus of $1.19 billion.
UiPath (PATH) is down more than -4% after reporting Q1 adjusted EPS of 15 cents, weaker than the consensus of 16 cents.
Earnings Reports(5/29/2026)
American Woodmark Corp (AMWD), Atlantic International Corp (ATLN), Buckle Inc/The (BKE), Critical Metals Corp (CRML), Genesco Inc (GCO), Liberty Live Holdings Inc (LLYVA), Navan Inc (NAVN), Pioneer Bancorp Inc/NY (PBFS), Richtech Robotics Inc (RR), Whitestone REIT (WSR).
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.
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Stock Indexes Rally to Record Highs on Peace Deal Hopes and AI Spending

American Eagle Outfitters, Inc. AEO reported solid first-quarter fiscal 2026 results wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. Meanwhile, revenues increased from the prior-year figures.
AEO posted earnings of 14 cents per share in the fiscal first quarter, surpassing the Zacks Consensus Estimate of 11 cents.
American Eagle Outfitters, Inc. Price, Consensus and EPS Surprise
The company benefited from strong demand across its portfolio, led by continued momentum at Aerie, which delivered standout multi-channel performance and profitability. Management credited compelling product assortments and the ongoing resonance of the “100% Aerie REAL” campaign for deepening customer connection and supporting growth.
An Insight Into AEO’s Q1 Revenues
Total net revenues of $1.20 billion jumped 10% year over year and surpassed the Zacks Consensus Estimate of $1.18 billion. This was backed by consolidated comparable sales (comps) and positive results across Aerie brand. Comps edged up 8% in the quarter. Our model predicted positive comps of 7.4% for the fiscal first quarter.
Brand-wise, revenues inched down 2.2% year over year to $678.5 million at the American Eagle brand. Also, comps for the brand declined 2%.
Revenues jumped 33.6% year over year to $480.8 million for the Aerie brand. Comps for the Aerie brand rose 25%. We expected sales growth of 4.1% year over year at the American Eagle brand and a 13.3% rise at Aerie for the reported quarter.
An Insight Into AEO’s Margins & Expenses
Gross profit inched up 41% year over year to $456 million. The gross margin of 38.2% expanded 860 basis points (bps) from the prior-year period, reflecting a meaningfully stronger merchandise margin profile and better cost leverage. The gain was mainly driven by a 710-basis-point lift in merchandise margins, largely because the prior-year period included a $75 million inventory write-down. In addition, buying, occupancy and warehousing (BOW) costs improved by 150 bps, helped by higher sales and ongoing cost-optimization efforts.
Selling, general and administrative (SG&A) expenses increased 11% year over year to $376 million. As a percentage of sales, SG&A expenses increased 40 bps year over year. The increase was led by planned investments in advertising, somewhat offset by leverage in the rest of the expense base.
Operating income came in at $28 million, a notable improvement from an operating loss of $85 million a year ago, and management noted that operating profit exceeded first-quarter guidance.
AEO’s Financial Health Snapshot
American Eagle ended the fiscal first quarter with cash and cash equivalents of $103.3 million. Total shareholders’ equity was $1.64 billion as of May 2, 2026. Ending inventory rose 27% year over year to $817 million, while inventory units increased 5%. Management said the higher inventory cost reflects this year’s tariff impact and the fact that last year’s inventory balance was reduced by an inventory write-down. Capital expenditures were $61 million in the fiscal first quarter.
AEO bought back nearly 3 million shares for about $53 million. Additionally, the company distributed $21 million to its shareholders through its quarterly cash dividend of $0.125 per share.
AEO’s Q2 & FY26 Outlook With Tariff Assumptions
American Eagle noted that all guidance is based on estimates and bakes in tariff assumptions of 10% on second-quarter receipts and 15% for the back half of fiscal 2026, while excluding any benefit from IEEPA tariff refunds.
For the second quarter of fiscal 2026, the company expects comparable sales to increase at a mid-to-high single-digit rate, gross margin to decline year over year, SG&A expenses to rise in the mid-teens, and depreciation and amortization to be in the mid-$50 million range. Operating income is guided to $45 million to $50 million, with a weighted average share count in the low 170 million range.
For fiscal 2026, AEO sees comparable sales to rise by mid-single digits, gross margin to increase year over year, SG&A to grow by high-single digits, depreciation and amortization to total around $220 million, and operating income to range between $390 million and $410 million, again assuming a low 170 million weighted average share count. AEO expects capital expenditure of $250-$260 million for fiscal 2026.
Shares of the Zacks Rank #4 (Sell) company have lost 25.2% in the past six months compared with the industry’s drop of 0.3%.
AEO Stock 6-Month Price Peformance
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks in the retail space are Tapestry, Inc. TPR, Victoria's Secret & Co. VSCO and Levi Strauss & Co. LEVI.
Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales indicates growth of 36.3% and 13.8%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 15.6%.
Victoria's Secret is a specialty retailer of women's intimates, sleepwear, apparel, sport and swimwear, and prestige fragrances and body care. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago reported numbers. VSCO delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Levi Strauss’ current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. LEVI delivered a trailing four-quarter average earnings surprise of 21.4%.
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American Eagle Q1 Earnings Beat Estimates, Aerie Comps Rise 25%

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American Eagle (AEO) Q1 2026 Earnings Transcript

American Eagle Outfitters (AEO) came out with quarterly earnings of $0.14 per share, beating the Zacks Consensus Estimate of $0.11 per share. This compares to a loss of $0.29 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +25.34%. A quarter ago, it was expected that this teen clothing retailer would post earnings of $0.71 per share when it actually produced earnings of $0.84, delivering a surprise of +18.31%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
American Eagle, which belongs to the Zacks Retail - Apparel and Shoes industry, posted revenues of $1.2 billion for the quarter ended April 2026, surpassing the Zacks Consensus Estimate by 0.94%. This compares to year-ago revenues of $1.09 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
American Eagle shares have lost about 33.4% since the beginning of the year versus the S&P 500's gain of 9.9%.
What's Next for American Eagle?
While American Eagle has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for American Eagle was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.27 on $1.37 billion in revenues for the coming quarter and $1.76 on $5.79 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Apparel and Shoes is currently in the bottom 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the same industry, Genesco (GCO), has yet to report results for the quarter ended April 2026. The results are expected to be released on May 29.
This seller of footwear, hats, clothing and accessories is expected to post quarterly loss of $2.55 per share in its upcoming report, which represents a year-over-year change of -24.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
Genesco's revenues are expected to be $470.28 million, down 0.8% from the year-ago quarter.
Should You Invest in American Eagle Outfitters, Inc. (AEO)?
Before you invest in American Eagle Outfitters, Inc. (AEO), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy.
Zacks Investment Research has been committed to providing investors with tools and independent research since 1978. For more than a quarter century, the Zacks Rank stock-rating system has more than doubled the S&P 500 with an average gain of +24.08% per year. (These returns cover a period from January 1, 1988 through May 6, 2024.)
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American Eagle Outfitters (AEO) Q1 Earnings and Revenues Top Estimates

The Home Depot, Inc. HD delivered first-quarter fiscal 2026 results that topped the Zacks Consensus Estimate on both the top and bottom lines. Adjusted earnings were $3.43 per share, down 3.7% from the year-ago quarter but came above the consensus mark of $3.40.
Net sales rose 4.8% year over year to $41.77 billion and beat the consensus estimate of $41.49 billion. Customer transactions totaled 391.1 million, down 0.9% year over year, while average ticket increased 2.3% to $92.76. The underlying business demand has been relatively similar to the trends seen throughout fiscal 2025, amid consumer uncertainty and housing affordability pressure.
Comparable sales (comps) increased 0.6% in the quarter, with U.S. comps up 0.4%. Foreign exchange rates provided an additional lift, contributing roughly 55 basis points (bps) to comps. Our model predicted consolidated comps growth of 1% for the fiscal first quarter.
This Zacks Rank #3 (Hold) company’s shares have lost 10.9% in the past six months compared with the industry’s 9.9% decline.
The Home Depot, Inc. Price, Consensus and EPS Surprise
Home Depot’s Costs & Margin Details
Gross profit increased 2.4% to $13.78 billion, supported by the higher sales. However, the cost of sales rose faster than revenues, which kept the gross margin under pressure compared with the prior-year period. The gross margin was 33%, down 80 bps year over year. Our model predicted a 90-bps year-over-year decline in the gross margin to 32.9% for the fiscal first quarter.
Selling, general and administrative (SG&A) expenses of $7.77 billion increased 5.7% from $7.96 billion in the year-ago quarter. As a percentage of sales, SG&A was 19.1%, up roughly 20 bps year over year.
Adjusted operating income was $5.15 billion, down 2.3% year over year, while the operating margin of 12.3% contracted 90 bps year over year.
Our model predicted the SG&A expense rate to increase 20 bps year over year to 19.1%. We anticipated the adjusted operating income to drop 4% year over year and the operating margin to contract 100 bps to 12.2% for the fiscal first quarter.
HD’s Other Financial Updates
Home Depot ended first-quarter fiscal 2026 with cash and cash equivalents of $1.60 billion, long-term debt (excluding current installments) of $44.8 billion and stockholders’ equity of $13.9 billion. In first-quarter fiscal 2026, the company generated $6.03 billion of net cash from operating activities.
Merchandise inventories were $27.28 billion and net receivables were $6.62 billion at quarter-end. The company reinvested $844 million in capital expenditures during the quarter and spent $286 million, net, on businesses acquired.
Home Depot returned cash to shareholders through dividends, paying $2.32 billion in the period.
Home Depot Reaffirms Fiscal 2026 Outlook
Management reaffirmed its fiscal 2026 framework, calling for total sales growth of approximately 2.5-4.5% and comparable sales growth of roughly flat to 2%. The company also expects to open about 15 stores this year.
For fiscal 2026, Home Depot continues to project gross margin around 33.1% and operating margin of approximately 12.4-12.6%, with adjusted operating margin expected in the 12.8-13.0% range. It expects capital expenditures of roughly 2.5% of total sales. The company anticipates an effective tax rate of about 24.3%, net interest expense of roughly $2.3 billion, and earnings per share growth of approximately flat to 4.0% from $14.23 in fiscal 2025.
Key Picks in the Retail Space
Levi Strauss & Co. LEVI, which is a designer and marketer of jeans, casual wear and related accessories, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LEVI delivered a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for Levi Strauss’ current financial-year sales indicates growth of 10.3% from the year-ago number.
Kohl's Corporation KSS, which is a department store chain, currently carries a Zacks Rank of 2.
KSS delivered a trailing four-quarter earnings surprise of 72.3%, on average. The Zacks Consensus Estimate for KSS’ current financial-year sales indicates a drop of 1% from the year-ago number.
American Eagle Outfitters AEO, which is a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for AEO’s current financial-year sales is expected to rise 5.1% from the corresponding year-ago reported figure. AEO delivered a trailing four-quarter earnings surprise of 37.6%, on average.
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Home Depot's Q1 Earnings Beat Estimates, Comparable Sales Up 0.6%

On Holding (ONON) came out with quarterly earnings of $0.47 per share, beating the Zacks Consensus Estimate of $0.35 per share. This compares to earnings of $0.23 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +32.77%. A quarter ago, it was expected that this running-shoe and apparel company would post earnings of $0.26 per share when it actually produced earnings of $0.31, delivering a surprise of +19.23%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
On Holding, which belongs to the Zacks Retail - Apparel and Shoes industry, posted revenues of $1.06 billion for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 0.86%. This compares to year-ago revenues of $808.1 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
On Holding shares have lost about 26.8% since the beginning of the year versus the S&P 500's gain of 8.3%.
What's Next for On Holding?
While On Holding has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for On Holding was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.42 on $1.13 billion in revenues for the coming quarter and $1.64 on $4.53 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Apparel and Shoes is currently in the bottom 36% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the same industry, American Eagle Outfitters (AEO), has yet to report results for the quarter ended April 2026. The results are expected to be released on May 28.
This teen clothing retailer is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of +137.9%. The consensus EPS estimate for the quarter has been revised 0.7% lower over the last 30 days to the current level.
American Eagle Outfitters' revenues are expected to be $1.18 billion, up 8.5% from the year-ago quarter.
Should You Invest in On Holding AG (ONON)?
Before you invest in On Holding AG (ONON), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy.
Zacks Investment Research has been committed to providing investors with tools and independent research since 1978. For more than a quarter century, the Zacks Rank stock-rating system has more than doubled the S&P 500 with an average gain of +24.08% per year. (These returns cover a period from January 1, 1988 through May 6, 2024.)
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On Holding (ONON) Tops Q1 Earnings and Revenue Estimates

Key Points
Amazon is opening up its logistics network to other businesses.
This may become a relatively high-margin profit driver.
Amazon has plenty of other avenues for growth.
Amazon (NASDAQ: AMZN) is currently the leader in cloud computing. The company's Amazon Web Services (AWS) is one of its biggest drivers of operating profits, as its core e-commerce business carries notoriously low margins. AWS still has attractive long-term prospects. CEO Andy Jassy noted in a letter to shareholders that 85% of IT spend still occurs on-premises.
As this spending moves to the cloud, Amazon should be one of the biggest winners. But has the tech leader found another potential growth avenue that could rival AWS? The company recently announced a new business segment, prompting investors to wonder whether that's the case. Let's look into it and decide what it could mean for investors.
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ASCS has entered the chat
Amazon spent years and a small fortune building a logistics network. It features transportation assets for long-distance shipping, massive warehouses, delivery drivers, and various tools for route optimization, analytics, and more. The company did so to offer free, fast shipping to its customers. This has paid off. Perks like free shipping, overnight delivery, and others arguably attract more shoppers to the platform and encourage them to spend more. But this network was primarily open to businesses within Amazon's ecosystem, including those selling on its website. That is now changing.
Amazon recently announced the launch of Amazon Supply Chain Services (ASCS), which will grant other businesses access to the company's logistics network. Notice the similarity with AWS. With the latter, Amazon built a large computing infrastructure and rents it to other companies via a cloud-based model. With ASCS, the company built a massive logistics network and will now rent it out to other companies, allowing them to avoid the cost of building their own. This could become a popular service.
Although e-commerce has become far more popular than it once was, it still has plenty of room for growth. Andy Jassy has said that 80% of retail commerce still happens in brick-and-mortar stores, and that will change over the long run.
Meanwhile, free and fast shipping, which is standard on Amazon, is still lacking at many other companies. These retailers might see an opportunity to improve their e-commerce operations by leveraging Amazon's logistics network. According to Amazon, major corporations such as Procter & Gamble, 3M, and American Eagle Outfitters have already signed up for ASCS. Further, like AWS, ASCS could potentially boast higher margins than Amazon's core e-commerce business.
The initial investment to build data centers and the entire AWS infrastructure was massive, but now that it is up and running, incremental costs per additional customer are relatively low. Perhaps we might see something somewhat similar with ASCS. It may not be as high margin as AWS (ASCS will face significant operating expenses, including labor and fuel costs), but it may well become a stronger profit driver than Amazon's e-commerce operations.
What does this mean for investors?
Of course, it's still too early to tell whether ASCS will be nearly as successful as AWS. Rival companies may choose not to use Amazon's logistics network, or ASCS' margins may be crushed by the various costs it will incur. These are all possibilities investors have to keep in mind: Amazon's new business venture isn't a slam dunk yet. However, this initiative is another example of Amazon's creativity and innovation, the kind that helped it become the leader in e-commerce and cloud computing.
Even without ASCS, Amazon has excellent growth prospects across its cloud, artificial intelligence, and advertising businesses, as well as other potentially attractive opportunities, such as its healthcare ventures through Amazon One Medical. Amazon also has a large customer base, with more than 200 million Prime members, and could find more ways to monetize this audience in the future.
Further, the tech leader has a wide moat through switching costs, the network effect, and a strong, recognizable brand name that effortlessly attracts customers to its platform. For all those reasons, Amazon's shares remain very attractive, regardless of whether ASCS succeeds or not.
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Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends 3M and Amazon. 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.

Has Amazon Found the Next AWS?

Key Points
GXO Logistics beat estimates on the top and bottom lines in its first-quarter earnings report.
CEO Patrick Kelleher doesn't see Amazon as a threat.
The company is delivering strong results in key strategic verticals.
Amazon (NASDAQ: AMZN) set off a panic in the supply chain industry on Monday when it announced its new supply chain services business.
Essentially, the company is opening up its logistics infrastructure, which powers its e-commerce business, to outside companies for the first time, with launch partners including Procter & Gamble and American Eagle Outfitters.
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Logistics stocks plunged on the announcement on Monday, and one of the hardest-hit companies was GXO Logistics (NYSE: GXO), which is the world's largest pure-play contract logistics company. GXO stock fell 18% on the news, a sign that investors believe Amazon represents a significant threat to the company.
The company reported first-quarter earnings on Wednesday, giving management an opportunity to push back on that narrative. GXO CEO Patrick Kelleher spoke to The Motley Fool about Amazon's entry into the market and the company's results.
What Amazon's entry into logistics means for GXO
While GXO investors are clearly spooked by Amazon's entry into the industry, Kelleher doesn't see it that way. In fact, he dismissed the threat, essentially calling Amazon a non-factor for GXO.
Kelleher explained that GXO operates highly customized warehouses for its customers, providing "bespoke solutions" that include automation and advanced technologies, like AI. Amazon, on the other hand, is inviting outside customers to use its pre-existing infrastructure for their logistics needs, which is meeting a much different value proposition than GXO is.
Regarding the stock sell-off on Monday, Kelleher saw that as a combination of a knee-jerk reaction from investors, which we have seen before when Amazon enters a new market, and a misunderstanding of GXO's business, which is focused on specialized solutions. Kelleher acknowledged that Amazon could have an impact on air freight transportation, which is capacity-constrained, as adding new air capacity could lower prices. However, he said the contract logistics industry wasn't facing a problem of finite capacity, but meeting customer needs, which GXO is well-equipped to do.
Finally, he also noted that the contract logistics industry is large enough, with a market size of $500 billion, that there is plenty of room in the market for a new entrant. In other words, Amazon's (or another company's) entry isn't going to cause a disruption.
What we learned from GXO's first quarter
Under new CEO Kelleher, GXO has been focused on organic growth, stepping back from its earlier strategy of growing through M&A, and executing in key verticals like aerospace and defense, and life sciences. Kelleher also sees a significant opportunity for organic growth in North America.
In the first quarter, GXO's revenue reached $3.3 billion, up 10.8% or 4.1% on an organic basis, edging out expectations at $3.22 billion. The company's acquisition of Wincanton explains the difference between the organic and nominal growth rates.
On the bottom line, its adjusted earnings per share rose from $0.29 to $0.50, and it delivered strong results in key verticals like aerospace and defense, technology, and life sciences. In its strategic verticals, the pipeline for new business grew 35%, which Kelleher attributed to bringing on experts through an advisory board and getting the right people in place, including completing his management team with the naming of CFO Mark Suchinski.
Looking ahead to the rest of the year, GXO modestly hiked its full-year guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share. It now sees adjusted EBITDA of $935 million-$975 million, up from a previous range of $930 million-$970 million, and adjusted EPS of $2.90-$3.20, compared to a previous range of $2.85-$3.15.
It continues to expect organic growth of 4%-5% for the year.
Is GXO a buy?
Kelleher believes the company can grow significantly faster than its current growth rate, noting that the industry compound annual growth rate (CAGR) is forecast to grow at 6%-8%, and he believes GXO can beat that.
The logistics company appears to be showing early results in its priority verticals, and the guidance hike is a good sign as well. The company is planning to host an Investor Day conference in the third quarter to outline its growth targets over the next three years.
While the stock has been disappointing in recent years, the Amazon sell-off appears to offer a buying opportunity, according to Kelleher's explanation. If he can accelerate the company's growth as he intends to, the stock will respond favorably.
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Jeremy Bowman has positions in Amazon and GXO Logistics. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends GXO Logistics. 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.