Time To Buy American Eagle Outfitters (AEO)?

American Eagle Outfitters (AEO) reported good news on Thursday. Same store sales were up 15 percent for the month of March. This was well better than analyst expectations of a 10.8% rise in comps. Total sales surged 11 percent and net sales rose 15 percent. So, how did shares of American Eagle react to the good news?

American Eagle's shares dropped 6.3% to finish the day at $17.45. It doesn't make much sense that shares of American Eagle dropped after such a good report. Investors may be able to take advantage of the recent dip.

American Eagle's shares are trading much cheaper than competitors shares at just 12.5 times next year's earnings. Abercrombie and Fitch (ANF) is trading at 20 times forward earnings, Urban Outfitters (URBN) at 20 times next year's earning and the Gap (GPS)at 13 times forward earnings. American Eagle has a solid balance sheet with 20 times more cash than debt and projected earnings growth of 13.3% per year.