A Comprehensive Review of Dividend Performance and Sustainability
American Eagle Outfitters Inc(AEO, Financial) recently announced a dividend of $0.1 per share, payable on 2023-10-27, with the ex-dividend date set for 2023-10-12. As investors eagerly anticipate this forthcoming payment, the company's dividend history, yield, and growth rates also come under scrutiny. Using data from GuruFocus, let's delve into American Eagle Outfitters Inc's dividend performance and evaluate its sustainability.
What Does American Eagle Outfitters Inc Do?
Specializing in apparel and accessories, American Eagle Outfitters Inc operates stores in the U.S., Canada, Mexico, and Hong Kong. The company leases all store premises, regional distribution facilities, some office space, and certain IT and office equipment. American Eagle also runs an online business that ships worldwide. It operates in two segments: American Eagle and Aerie. The majority of its revenue is generated from its primary brand, American Eagle, which offers a variety of specialty apparel and accessories for women and men. The U.S. market contributes the majority of its revenue.
A Glimpse at American Eagle Outfitters Inc's Dividend History
Since 2004, American Eagle Outfitters Inc has maintained a consistent dividend payment record, with dividends currently distributed on a quarterly basis. The chart below provides a historical view of annual Dividends Per Share.
Breaking Down American Eagle Outfitters Inc's Dividend Yield and Growth
Currently, American Eagle Outfitters Inc has a 12-month trailing dividend yield of 1.17% and a 12-month forward dividend yield of 2.38%. This indicates an expected increase in dividend payments over the next 12 months.
Over the past three years, the company's annual dividend growth rate was -13.20%. This rate increased to -6.60% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at -0.70%. Based on the company's dividend yield and five-year growth rate, the 5-year yield on cost of American Eagle Outfitters Inc stock as of today is approximately 0.83%.
The Sustainability Question: Payout Ratio and Profitability
The sustainability of the dividend is gauged by evaluating the company's payout ratio. The dividend payout ratio indicates the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-07-31, American Eagle Outfitters Inc's dividend payout ratio is 0.19.
The company's profitability rank offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks American Eagle Outfitters Inc's profitability 7 out of 10 as of 2023-07-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
American Eagle Outfitters Inc's growth rank of 7 out of 10 suggests a good growth trajectory relative to its competitors.
Revenue is the lifeblood of any company, and American Eagle Outfitters Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The company's revenue has increased by approximately -1.20% per year on average, a rate that underperforms approximately 63.9% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, American Eagle Outfitters Inc's earnings increased by approximately -17.00% per year on average, a rate that underperforms approximately 79.64% of global competitors.
Conclusion
In conclusion, American Eagle Outfitters Inc's consistent dividend payments, combined with its profitability and growth metrics, indicate a robust financial performance. However, the negative growth rates raise questions about the sustainability of its dividend payments. It will be interesting to see how the company navigates these challenges in the coming years. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
