American Eagle shares rise on $200M accelerated buyback plan

Investing.com -- Shares of American Eagle Outfitters Inc. (NYSE: NYSE:AEO) climbed 6% following the announcement of a $200 million Accelerated Share Repurchase (ASR) program. The fashion retailer’s buyback initiative signals a strong capital position and confidence in its long-term growth strategy, compelling investors to react positively during the trading session.

American Eagle’s ASR agreement with Bank of America, N.A. involves the repurchase of approximately 18.1 million shares, based on the closing price on March 14, 2025. This repurchase represents around 9.5% of the company’s fully diluted outstanding stock and is part of an existing share repurchase authorization totaling 68.5 million shares.

The company’s Executive Chairman of the Board and Chief Executive Officer, Jay Schottenstein, expressed that the ASR program underscores American Eagle’s commitment to a balanced approach to capital allocation and delivering strong returns to shareholders. He stated, "We are pleased to announce an accelerated share repurchase program, which reflects our strong capital position and confidence in our long-term strategic growth plan. This program, combined with our quarterly cash dividend, underscores our commitment to a balanced approach to capital allocation and delivering strong returns to shareholders."

The buyback plan comes as a strategic move for American Eagle, aiming to enhance shareholder value and demonstrate the leadership’s belief in the company’s financial health and prospects. The market’s reaction to the buyback announcement is typically seen as a vote of confidence, as it often suggests that the company considers its stock to be undervalued.

While the announcement of the ASR program is the primary driver of the stock’s ascent today, the company did not provide any additional financial details or forecasts in conjunction with the buyback news. Investors tend to view share repurchases as a positive signal that a company is in a position to return capital to shareholders while also potentially reducing the number of shares outstanding, which can increase earnings per share and, therefore, the value of remaining shares.

As the market continues to digest the news, American Eagle’s stock movement serves as a reflection of the current investor sentiment towards the company’s financial strategy and growth prospects.

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