American Eagle Outfitters holds a Zacks Rank #3, or Hold, as its valuation discount and improving profitability are balanced by tariff pressures, rising advertising costs, and softness in the American Eagle brand. The stock trades at 9.4 times forward earnings, below the Zacks sub-industry average of 15.14 times and its own five-year median of 11.6 times. First-quarter fiscal 2026 revenue rose 10% to $1.20 billion, earnings of 14 cents per share beat the consensus estimate of 11 cents, and gross margin expanded to 38.2% from the prior-year period. Management guided for fiscal 2026 operating income of $390 million to $410 million and second-quarter operating income of $45 million to $50 million, though tariffs are expected to hurt second-quarter gross margin by 150 to 200 basis points and selling, general and administrative expenses are projected to grow in the mid-teens. The American Eagle brand saw a 2% decline in first-quarter comparable sales, with weakness in women's bottoms, while Aerie continues to grow quickly.
American Eagle Outfitters IncTariffs expected to hurt second-quarter gross margin by 150-200 bps.
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