Management was able to generate significantly more money from operations for the six-month period, and the balance-sheet line dedicated to cash and cash equivalents is on the rise. The green stuff is always king, and those aspects of the release might be worth a couple points, but let's not kid ourselves here: American Eagle doesn't seem like it's in great shape for the upcoming holiday season. The decline in comps tells me that traffic issues need to be addressed. The quicker the better, of course.

American Eagle was traded down almost 4% by the market on Thursday in reaction to the earnings news. I would agree with the market's assessment. Now, it is possible that the stock could rise after this sell-off. Investors are in such an incredibly bullish mood these days.

But would it be wise to buy American Eagle on a dip? Maybe fast traders can make some money, but longer-term thinkers would have to contemplate the situation with extreme care. As management comments in the press release, saving money is of vital importance. Unfortunately, such an attitude tends to put pressure on marketing/branding initiatives. This is always a delicate balancing act: do you spend money to keep your brand ahead of the competition, or do you hunker down and retain as much cash as possible?

I'm not sure American Eagle's operators can strike the proper balance. They're most likely merely waiting for the economy to rebound. For me, the company is not a buy at this juncture in the economic cycle. What would make me change my mind? Give me some better comps. Then we can talk...

Disclosure: I don't own any company mentioned; positions can change without notice.