Highlights

  • American Eagle shows 82.65% basic EPS growth, a P/E of 9.22 and PEG of 0.80.
  • Second quarter Fiscal 2026 revenue was $1.380 billion, against $1.284 billion a year earlier.
  • Net tariff refunds of $161 million contributed to second quarter operating income of $211 million.
  • The company repurchased 3.0 million shares in 26 weeks; 46 million remain authorized.

One-year earnings growth of 82.65%, paired with a trailing twelve-month P/E of 9.22 and an expected-basis PEG of 0.80, puts American Eagle Outfitters (NYSE:AEO) among undervalued growth stocks, with shares trading at USD 19.44 on October 28, 2026, up 0.13%. In its latest disclosures, the specialty retailer extended its credit facility maturity to June 4, 2031, reported second quarter Fiscal 2026 diluted earnings per share of $0.79 on September 10 and gave third quarter and full year operating income guidance on its earnings call.

American Eagle Outfitters is based in Pittsburgh, Pennsylvania, and incorporated in Delaware. It describes itself as a global specialty retailer of clothing, accessories and personal care products under the American Eagle and Aerie brands, and also operates Todd Snyder and Unsubscribed. Its two reportable segments are American Eagle and Aerie. The company operates stores in the United States, Canada and Mexico, with merchandise available in more than 30 countries through license partners.

Growth: Second Quarter Fiscal 2026 Earnings, Revenue and Brand Results

Net income attributable to American Eagle was $134,084 thousand in the 13 weeks ended August 1, 2026, against $77,633 thousand a year earlier, and $157,607 thousand for the 26 weeks against $12,734 thousand. Basic earnings per share were $0.80 against $0.45, and diluted earnings per share were $0.79 against $0.45. The company stated that diluted earnings per share include a $0.52 per share benefit from net tariff refunds.

Total revenue increased 8% to $1.380 billion from $1.284 billion. Aerie revenue increased 25% and American Eagle revenue increased 1%, while total comparable sales increased 6%, with Aerie up 19% and American Eagle down 1%.

Gross profit increased 34% to $672 million, or 48.7% of revenue, including tariff refunds of $192 million. Operating income of $211 million increased 105% from $103 million, and net tariff refunds of $161 million contributed 1,170 basis points of operating margin expansion.

Valuation: P/E of 9.22, PEG of 0.80 and Cash Flow

The P/E ratio of 9.22 is measured on trailing twelve-month earnings, and the PEG ratio of 0.80 is on an expected basis. Cash provided by operating activities was $116,325 thousand for the 26 weeks, against cash used of $26,859 thousand a year earlier; that figure includes $195.7 million of tariff refunds, including interest.

On the second quarter call, Chief Financial Officer Ravi Thanawala, who said he had joined the company a few weeks earlier, said he is comfortable with the company's expectations for the balance of the year.

Capital Returns, Credit Facility and Spending

American Eagle used $53.5 million, including commissions and excise taxes, to repurchase common stock in the 26 weeks and paid $41.9 million in cash dividends at a quarterly rate of $0.125 per share. It repurchased 3.0 million shares under the Board's authorization, and 46 million shares remained authorized through February 3, 2029.

Cash and cash equivalents were approximately $148.0 million. The asset-based revolving credit facility allows borrowing up to $700 million, and the June 4, 2026 amendment extended its maturity to June 4, 2031. Borrowings were $55.0 million at August 1, 2026. Capital expenditures were $127.6 million in the 26 weeks, and the company expects Fiscal 2026 capital expenditures of between $250 million and $260 million.

Disclosed Risks and Outlook for Fiscal 2026

The company said its results were negatively affected by macroeconomic challenges and inflationary pressures on consumer spending, and that trade policy uncertainty may continue to affect its business. The U.S. Supreme Court held on February 20, 2026 that the IEEPA tariffs were unlawful. A 10% global tariff imposed under Section 122 was invalidated by the Court of International Trade on May 7, 2026, with litigation ongoing, and additional Section 301 tariffs were announced effective July 24, 2026.

Selling, general and administrative expenses were $408,354 thousand, or 29.6% of revenue, against 26.7%. Net interest expense was $47,125 thousand against $1,919 thousand; the company said it relates primarily to the Participation Agreement for tariff refund claims, under which it paid $70.8 million to the buyer in the quarter. Owned stores numbered 1,167 against 1,185. The company said pending legal matters are not expected to have a material adverse effect.

On the second quarter call, management guided third quarter comparable sales growth in the mid- to high single digits, with Aerie and OFFLINE in the high teens to 20% range and American Eagle approximately flat. It expects third quarter operating income of $110 million to $115 million, and full year operating income of $540 million to $550 million based on mid-single digit comparable sales growth, inclusive of net tariff refund benefits.