Disclosures

American Eagle Outfitters Inc.

I, Jeff VanSinderen , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
Disclosure Chart

Initiated on 10/22/2008 with a "Buy" rating and a $16.00 Price Target

Ratings Distribution as of May 17, 2012 % with Investment Banking Relationships
Rating Number of Companies Percent of Total Rating Number of Companies Percent of Total
Buy 112 73.7% Buy 13 100.0%
Neutral 37 24.3% Neutral 0 0.0%
Sell 3 2.0% Sell 0 0.0%
Total 152 100% Total 13 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

     

     

     

     

     

     

     

  • General Macroeconomic Risk: There is a considerable macroeconomic headwind at present and retailers such as AEO are experiencing external pressure.

    •  

     

     

     

     

     

     

     

    • General Industry Risk: The company is subject to the inherent volatility of apparel retailing (including potential merchandise content issues) and a possibility exists that the company could miss our estimates, the consensus or its own guidance.
    • Expansion Risk: AEO’s continued growth and success depends in part on opening, operating, and expanding stores in a timely and profitable manner.  
    • Brand Development Risk: New brands such as 77kids, MARTIN & OSA and aerie require careful management, substantial investment, and are subject to risks including customer acceptance, competition, differentiation, and the ability to attract qualified personnel.  
    • Competition: The apparel industry is highly competitive and AEO’s close rivals ARO and ANF are constantly competing for market share.   
    • International Sourcing Strategy: AEO purchases a significant amount of merchandise through a single foreign buying agent and does not maintain exclusive commitments to purchase from any vendor. Any disruption of imports could have a negative effect on operations.
    • Auction Rate Security Risk: Negative conditions in the ARS market could negatively affect AEO’s long-term investment balance.  That said, risk is likely to be temporary and many of the securities held are backed by the U.S. government.