Two major retail apparel giants, American Eagle Outfitters (AEO) and Abercrombie & Fitch (ANF), are set to report their third-quarter earnings on Tuesday, November 21, capturing the attention of investors as their stock performances soar. Eager traders are eyeing their upcoming reports and the financial prospects each company could unlock amidst the allure of the retail world.

American Eagle Outfitters: A Stock on the Rise

American Eagle Q3 Preview: Ahead of its Q3 report, American Eagle’s stock stands out in terms of growth and value with the company becoming somewhat of a fashionista of casual apparel, footwear, and accessories for Generation Z and younger Millennials in the United States and Canada.

Potential for Strong Growth and Value

Third quarter earnings are expected to rise 14% year over year to $0.48 per share with Q3 sales forecasted at $1.28 billion and up 3%. More intriguing, the Zacks ESP (Expected Surprise Prediction) indicates American Eagle may be able to surpass earnings expectations with the Most Accurate Estimate having Q3 EPS at $0.50 a share and 4% above the Zacks Consensus.

Impressive Performance and Considerable Dividend Yield

It’s also noteworthy that American Eagle most recently beat the Zacks Consensus for Q2 EPS by 66% with earnings at $0.25 per share compared to estimates of $0.15 a share. Furthermore, American Eagle’s stock has soared +40% year to date but still trades at a reasonable 14.7X forward earnings multiple. This is very compelling considering the company’s intriguing quarterly growth and generous 2.04% annual dividend yield.

Abercrombie & Fitch: Rides the Recovery Wave

Abercrombie & Fitch Q3 Preview: With inflationary headwinds starting to subside the post-pandemic growth and recovery of Abercrombie is hard to overlook as a staple of premium casual apparel with a global footprint that includes 759 stores across North America, Europe, Asia, and the Middle East.

Predicted Earnings Surge and Reinforced Outlook

To that point, Q3 earnings are expected at $1.14 per share compared to $0.01 a share in the prior-year quarter. Quarterly sales are forecasted to be up 11% to $977.52 million. Plus, the Zacks ESP indicates Abercrombie could also beat earnings expectations with the Most Accurate Estimate having Q3 EPS at $1.17 a share and 2% above the Zacks Consensus.

Stellar Performance and Favorable Valuation

Abercrombie most recently crushed Q2 earnings expectations with EPS coming in at $1.10 per share versus estimates of $0.13 a share. Correlating with its strengthening outlook, Abercrombie’s stock has now skyrocketed +217% this year but still trades reasonably at 16.1X forward earnings.

Other Newsworthy Retail Apparel Stocks

Guess (GES), Nordstrom (JWN), and Urban Outfitters (URBN) are among the selection of retail apparel stocks to keep an eye on with their own Q3 reports on the horizon. Their potential growth and valuation make them a notable ensemble as they stand at attention with a Zacks Rank #3 (Hold), suggesting the significance of their upcoming quarterly results in the marketplace.

Zacks Investment Research