American Eagle Stock Soars: Here’s Why Wall Street Is Buzzing

Retail darling American Eagle (AEO) just caught a bullish tailwind—and traders are scrambling for a piece of the action. Here’s the breakdown.

The Catalyst: More Than Just Denim Dreams

Rumors of a surprise partnership with a crypto payment giant sent speculative cash flooding in. Because nothing pumps a stock like blockchain buzzwords, right?

Short Squeeze or Sustainable Rally?

Volume spiked 300% above average—classic FOMO fuel. But with P/E ratios still in fantasyland, skeptics whisper ‘overbought.’

Bottom Line: Another day, another meme-stock resurrection. Whether it’s fundamentals or just hype chasing, AEO bulls are riding high… for now.

Image source: Getty Images.

In a post on Truth Social this morning, President TRUMP praised the ad campaign and declared AE's jeans are now "flying off the shelves." Investors are taking their cue from the president, making the same thing happen with American Eagle stock, which is up an astonishing 19% through 12:35 p.m. ET.

Is this good or bad news for American Eagle stock?

A shout-out from President Trump could turn out to be a double-edged sword. I fear he's doing AE no favors by turning AE's ad campaign political. Tagging Sweeney as "a registered Republican" in his post could attract one half of the American public to AE's stores, boosting sales and profits. It could also alienate the other half.

Investors should be wary of this, even if today the president's endorsement seems unqualifiedly good news.

Is American Eagle stock a buy?

With that reservation in mind, let's take a quick look at the numbers.

Valued at $1.9 billion, with $197 million in trailing-12-month earnings and superior free cash FLOW ($212 million), AE stock looks objectively cheap -- costing less than 10x earnings, and less than 9x free cash flow.

Earnings are expected to double over 2024 levels this year, hitting $1.68 per share, but fall back below $1 in 2026. That kind of volatility can make it hard to value the stock. I'm also leery of the debt load -- $1.7 billion net of cash on hand. Still, AE pays a generous 4.7% dividend yield.

On balance, I consider it a solid stock.