American Eagle Outfitter Inc. (NYSE: AEO) reported its fiscal second-quarter financial results before the markets opened on Wednesday. The giant retailer had $0.17 in earnings per share (EPS) on $797 million in revenue. That compared to Thomson Reuters consensus estimates that called for EPS of $0.14 and $769.56 million in revenue. In the same period of the previous year, the company posted $0.03 in EPS and revenue of $710.60 million.

Consolidated comparable sales increased 11%, compared to a 7% decrease last year. Total merchandise inventories at the end of the second quarter increased 4% to $409 million, compared to $393 million last year.

Despite beating both the top and bottom line, shares of American Eagle suffered in the market Wednesday, which had many investors and analysts scratching their heads.

Even looking at recent analyst calls yields no clues to this mystery tank. Over the past two months, a majority of the calls were overly positive on the stock. For example:

• Oppenheimer reiterated an Outperform rating with a $19 price target.
• B. Riley reiterated a Buy rating with a $21 price target.
• Jefferies reiterated a Buy rating with a $23 price target.

The only neutral call was from Wunderlich, which reiterated a Hold rating.

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Perhaps a report from a key analyst will come out in the next few days explaining this drop, but until then it seems puzzling to outsiders and active traders alike. If you just looked at chat-room and social media chatter, you might be equally as puzzled at the reaction.

Jay Schotternstein, Interim CEO of American Eagle, commented on the earnings:

I’m pleased to report another strong quarter, and to see positive momentum continue. The team is delivering exceptional execution, and our customers have taken notice of improvements to our merchandise and overall customer experience. Both American Eagle and Aerie delivered strong sales and earnings growth across channels. We have two of the best-positioned brands in the marketplace today, and we are well poised to capitalize on our strengths. We have vast opportunity for ongoing improvements and will strive to deliver continued growth and returns to our shareholders.

The company had $327 million in cash and investments in the quarter, compared to $263 million in the same period from the previous year.

Shares of American Eagle were down 8.8% on Wednesday to $16.65. The stock has a consensus analyst price target of $19.10 and a 52-week trading range of $11.77 to $18.49.

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