What happened Shares of American Eagle Outfitters (NYSE: AEO) stock jumped more than 6% in early trading Wednesday before settling down to about a 4% gain as of 2:50 p.m. EST. The stock price movement comes in response to AE's third-quarter 2020 earnings report, which was released after close of trading Tuesday evening. In this report, AE reported earning $0.35 per share pro forma, which was ahead of analyst estimates, on sales of $1.03 billion, which met expectations. Image source: Getty Images. So what Earnings when calculated according to generally accepted accounting principles (GAAP) came in at $0.32, down roughly 33% from the $0.48 per share earned in last year's Q3, and sales declined 3%. But even so, CEO Jay Schottenstein said the results "exceeded our expectations" -- and Wall Street's as well. Sales at the company's flagship American Eagle stores declined 11% year over year, largely tied to "mall traffic declines related to COVID-19," but sales at AE's Aerie lingerie business grew 34% year over year, and digital sales grew 29%. Now what American Eagle did not provide guidance for what to expect in the fourth quarter, or for the year as a whole, but analysts are optimistic that things are continuing to improve at the clothing chain. Street forecasts envision sales declining only 1% this current quarter (much better than the expected 13% decline for the year), although profits will probably sink further -- down another 14% in Q4 -- and AE is expected to end up booking a loss for the year. Paired with the stronger-than-expected performance in Q3, however, even these expectations were enough to lead four separate analysts to raise their price targets on American Eagle stock today -- to as high as $22 per share, or 19% above where the shares trade right now. With AE stock selling for less than nine times earnings currently, it's hard to argue this stock is not already a bargain. 10 stocks we like better than American Eagle OutfittersWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Eagle Outfitters wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of November 20, 2020 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source