I'm characterizing this as odd because I guess I was expecting to see a big beat on the bottom line after observing the strong rally in the stock. At the time of this writing, shares of the retailer were trading higher by over 6%, with tons of volume backing the bid.
Of course, there's nothing in the rule book that says a stock can rally only after beating estimates. There are other elements that traders and institutions take into consideration. In fact, here's a highlight from the press release that shareholders will appreciate: same-store sales increased 5%, vastly improving over the awful decline witnessed in the comparable period. Also, net cash from operating activities for the full fiscal year ending in January 2010 was a lot better than what was brought in for the fiscal year ending in January 2009.
American Eagle Outfitters is readying itself for future growth. According to this Reuters item, international markets are being looked to for purposes of expansion. In addition, evaluation of the inventory profile by management will hopefully widen the sales base; the goal is to present as many values as possible to frugal (yet fashionable) shoppers.
The chain nailed the quarter in an overall sense, but should an investor purchase the stock today? No, not today. As always, I'm wary of buying an earnings rally. If any action should be taken this afternoon, I'd presume capturing profits would be the wise move.
I will say this, though: unless this price movement is completely meaningless, I'd have to believe that breaking the 52-week high of $19.86 is in the cards. So, there still could be a short-term trade here on a pullback. It's something to keep in mind.
Disclosure: I don't own any company mentioned; positions can change without notice.