Hey Hottie! We meet again on this board again... I think our first encounter was on the Sprint board a couple years ago, and the SPLS board a few months ago, too.
Anyway, I agree that this P/E ratio in the upper-20s is high, but I think all they have to show--at least for now in this tough retail environment--is that they can pay the dividend without dipping into their pile of cash. You yourself just said that you have them earning 50 cents this year, that will cover the dividends without having to dip in their pile of cash. So investors looking for good dividend stocks now see that they have one here (the FED is giving investors nothing right now, so equities are the only option). Investors can earn a 4-plus-percent dividend while waiting for retail to turn around. AEO did have a 7% drop in Same-Store-Sales, but if they can turn that around by next year, the stock can head back to the 20s. I am more bullish than yesterday; it's huge reward with minimal risk (although you know I am a little biased as a long-time long).
Good luck to you, too, Hottie! :-)
The trend is definitely changing direction. AEO has shown it can weather the retail storm much better than the AROs and PSUNs of the world, and it will continue to do so. Everyone can enjoy their 4.2% dividend yield while the stock slowly heads back towards its stock price of last year and two years ago.
I agree with you there. The middle class is getting squeezed. However, the tech-revolution has a lot to do with it, too. Teens and/or their parents who used to spend all their money on clothes are now having to split it between cell phones, tablets, phone contracts, as well as clothing.
$5 million dollar profit is not good... There's no way to spin it positive other than the fact that this is traditionally one of the weaker quarters for retail (no Christmas shopping and too soon for back-to-school). However, they did reiterate their guidance for 17-19 cents per share next quarter, so this shows that the company can pay its big dividend without eating into its pile of cash too much.
Yes, this could be the start of the retail turnaround. The clothing retailers have been beaten down 50-80% this year, and TJX, JCP, URBN and AEO just reported beats, and ARO just stated that they expect to be at the high-end of their guidance, so this is looking better. Also, I like WTSL down below a dollar per share.... If they report a beat, that stock can roar 200 to 400% back to the 3-5 dollar range where it was trading before the plummet. Good luck to you!
AEO is one of the few middle-of-the-mall-clothing retailers that is profitable right now. This earnings beat has shown that they can weather this retail storm. They are almost earning enough profit to pay their dividend without dipping into their huge cash pile (next Qtr they expect to earn 17-19 cents, and their quarterly dividend is only 12 cents), so it also shows that their 4.5% dividend yield is safe going forward. This beat, and the reiterated positive guidance for next quarter, should turn AEO's stock price back up to the mid-teens over the next six months.
Over the last month this stock has been moving higher, making higher highs and higher lows. This upward trending channel after the last positive quarterly report should continue. Coke's deal with Monster only grows the whispers of a potential deal of some sort. This stock got hit really hard, so it has lost its growth-P/E ratio, and now its P/E ratio looks more like a value P/E, but it's still growing revs at a 20-something percent clip year-over-year. The trend should continue upward.
I still have my good-til-canceled buy order for 25k shares @ $.11 from earlier, but I'm pretty sure it won't fill now after this news release. SMDM should continue to trend higher, because this stock does not deserve to stay at this low P/E ratio if it is going to be in this many big-box stores during the Christmas shopping season. Its market cap is already just a fraction of revenues and if it has decent shelf space/visibility in big-box stores going forward, it should continue to grow revenues further. So the market cap should only continue to grow.
Yes, this good news has resulted in a nice pop this Tuesday morning! :-) Now I'm wishing I would have bought more when it fell to $.12 per share, but I was hesitant because I already have a good number of shares so I can just enjoy the ride back up to my cost basis. Hopefully, the Wal-Mart deal will spur long-term top-line and bottom-line growth.
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To repeat... let this baby ride! I'm up $500 in the last two days on this long position, and I have no reason to sell after the earnings beat. This is a fine company to be an owner of, especially at this lower P/E multiple and market cap.
Also, there were a lot of shorts in this name, many of whom still have to close out their short positions. This stock may continue to trend up for months now that the doom-and-gloom is being put to rest. If next quarter is a beat, too, we may head back up to the 52-week high... and squeeze a lot of shorts in the process.
Yes, that's why I used 'cyclical' and 'momentum' in the title of this post. CAT, TEX, MTW, etc. (the construction/industrial names) are so cyclical and move very hard when the market moves.... which is scary if you are stuck holding the stock on the downslide, but great if you want to buy at a better price, or are holding it on an upswing. I hope the DOW doesn't come down another 500, but if it does, I think we'll both be part-owners of this company. :-)
Even better! The company beat on top-line and bottom-line estimates, and the stock has pulled back. So investors have the hindsight of last Q's actual numbers with the chance to buy it at prices close to where it was before the report came out. Now if only I could buy Apple stock at prices that it traded at before the iPod and iPhone were ever invented... Hahaha! ;-)
JOEZ was trading at $1.00-$1.05 until they reported an earnings beat, then the stock popped to $1.25. Now it is trending back to $1.10. Here's a second chance to buy the company at just a little more than it was trading at before the earnings beat, however, you now have the hindsight of last quarter's big beat. It's very rare that you get to go back to the past, but when the opportunity presents itself, you can just enjoy and take advantage of the imperfection in the market.
Yeah, I saw its price fall in late 2010/early 2011, but when it collapsed to that ridiculous low a little later in 2011 I "put my toe in the water" and bought more when they reported a good quarter and the stock moved higher. As the price-rise continued on into the mid-30s and throught the 40s I was kicking myself for selling. So I'm hoping that it falls a little more so I can be an owner of this company again.
It couldn't hold. It looks like it was faking it, as it collapsed the day after a positive afternoon. We'll just have to keep waiting and watching for strong support after an up-day.
Clearly, Kai. His peer-reviewed White Paper was titled "How to Look Like a Fool on the Internet: A Deposition on Wasting Time and Losing Respect in front of Complete Strangers".