Shares of young adult apparel chain American Eagle Outfitters (AEOS) are down $2 in after hours trading to $20.75 per share. The company reduced its fourth quarter earnings guidance tonight from 74 cents to 71 cents. That would put 2005 earnings at $1.90 for the year. A three-cent trimming of estimates does not warrant a nearly 10% dicing of the stock, mostly due to its already meager valuation.

If AEOS can hit $1.90 for the year ending in January, the shares will be trading at only 11 times trailing EPS in February should the current $20.75 price hold. For a company with a pristine balance sheet that can grow earnings 8%-10% annually for the next three to five years, that's insanely cheap.