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American Eagle Outfitters stock (NYSE: AEO), which sells men’s and women’s apparel and accessories under the American Eagle, Tailgate, Todd Snyder, and Aerie brands, experienced almost a 14% growth over the last week (five trading days) to levels of around $38 currently. In fact, the company’s stock is up 87% year-to-date. AEO is riding high on the strength of its Aerie loungewear brand, which has been a strong performer – given that working from home became an imperative for many. This segment accounts for 40% of total company sales.

But will AEO’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price, returns for AEO stock average around 0.9% in the next one-month (twenty-one trading days) period after experiencing a 13.5% rise in a week. But how would these numbers change if you are interested in holding AEO stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test AEO stock chances of a rise after a rise. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF AEO stock moved by -5% over five trading days, THEN over the next twenty-one trading days, AEO stock moves an average of 2.2%, with a 56% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of American Eagle Outfitters Stock Movements:

Question 1: Is the average return for American Eagle Outfitters stock higher after a drop?

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Answer: Consider two situations,

Case 1: AEO stock drops by -5% or more in a week

Case 2: AEO stock rises by 5% or more in a week

Is the average return for AEO stock higher over the subsequent month after Case 1 or Case 2?

AEO stock fares better after Case 2, with an average return of 2.3% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.8% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how AEO stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold AEO stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For AEO stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for AEO after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although AEO stock appears to be an exception to this general observation.

AEO returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for AEO stock by changing the inputs in the charts above.

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

See all Trefis Featured Analyses and Download Trefis Data here

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