American Eagle Outfitters, Inc. AEO remains committed toward rewarding its shareholders through impressive capital-deployment plans. Recently, the company’s board authorized an additional repurchase of nearly 30 million shares through Feb 3, 2024. With this, the overall shares available for repurchase as of Jul 10, 2019, are nearly 37.4 million.
American Eagle intends to make these repurchases through open market purchases including compliance with 10b5-1 of the Securities Exchange Act of 1934. Robust free cash flow and considerable cash balance owing to the company’s impressive financial performance has been prompting American Eagle to take such shareholder-friendly decisions.
In fact, this Zacks Rank #3 (Hold) company currently enjoys a strong financial status. As of May 4, 2019, it had a debt-free balance sheet with total cash and investments of $350 million, up from $310 million in the prior-year quarter.
In first-quarter fiscal 2019, the company returned nearly $44 million to its shareholders through cash dividends and share buybacks. It paid dividends of $24 million and bought back nearly 7911,000 shares worth $20 million. American Eagle also bought back roughly 4.3 million shares on a year-to-date basis.
Furthermore, management declared a quarterly cash dividend of 13.75 cents per share, payable Jul 26, 2019. All these actions clearly underscore the company’s commitment toward boosting shareholder value.
Regarding capital expenditures, it is imperative to mention that American Eagle spent $37 million in the fiscal first quarter. For fiscal 2019, management anticipates capital expenditures of $200-$215 million, of which more than half will be allocated to store openings and refurbishment. The balance will be invested in omni-channel and digital projects as well as general corporate maintenance.
In the past six months, shares of American Eagle have lost 15.8% compared with the industry’s 16% decline. The decline in share price might be attributed to the company’s soft earnings view for second-quarter fiscal 2019. Also, adjusted earnings for the same period are envisioned to be 30-32 cents, lower than 34 cents earned in the year-ago quarter.
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