雅虎香港財經 Glance at Abercrombie's (ANF) Q1 Earnings: Is It a Buy Option?
Abercrombie & Fitch Co. ANF is scheduled to report first-quarter fiscal 2024 results on May 29, before the opening bell.
The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $948.8 million, suggesting 13.5% growth from that reported in the year-ago quarter. For fiscal first-quarter earnings, the consensus mark is pegged at $1.66 per share, implying a significant increase from the 39 cents reported in the year-ago quarter. The consensus estimate for earnings has moved up 5.7% in the past seven days.
In the last reported quarter, the company’s earnings beat the consensus estimate by 5.7%. Moreover, ANF has delivered an earnings surprise of 715.6%, on average, in the trailing four quarters.
Abercrombie & Fitch Company Price and EPS Surprise
Abercrombie & Fitch Company price-eps-surprise | Abercrombie & Fitch Company Quote
Unlocking the Key Potential
Abercrombie has been gaining from continued momentum in the Abercrombie brand, improvement in the Hollister brand and store-optimization efforts. The company noted that its efforts to improve the positioning of the Hollister brand have been paying off. Strategic investments across stores, digital and technology via its Always Forward Plan bode well.
The company’s first-quarter fiscal 2024 performance is expected to have benefited from brand strength and solid demand for its products that resonate well with customers. Undoubtedly, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing digital commerce and efficiently controlling expenses.
On the last reported quarter’s earnings call, management anticipated continued strong sales growth for each of its brands. It anticipated consolidated net sales to increase low-double-digits from $836 million reported in the year-ago period.
Our model predicts first-quarter fiscal 2024 sales for the Abercrombie brand to increase 12.5% year over year. Sales for Hollister are expected to improve 10.1% year over year.
We note that Abercrombie has been witnessing favorable margin trends, mainly driven by lower freight and raw material expenses, and improved average unit retail.
For the first quarter of fiscal 2024, the company projected an operating margin of 8-10%, higher than the adjusted operating margin of 4.6% delivered in first-quarter fiscal 2023. This will be backed by a higher gross margin. We expect adjusted operating margin of 8.5% for the fiscal first quarter, up 390 bps year over year. Our model predicts the gross margin to expand 220 bps year over year to 63.2% in the fiscal first quarter.
However, Abercrombie has been witnessing elevated operating costs on higher technology expenses and incentive-based compensation. Additionally, inflation and increased investment for the 2025 Always Forward Plan initiatives are likely to have been concerning in the to-be-reported quarter. Our model estimates an increase of 8% in adjusted operating expenses for the fiscal first quarter.
The Zacks Model Findings
Our proven model conclusively predicts an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Abercrombie currently has an Earnings ESP of +2.53% and sports a Zacks Rank of 2.
Valuation Picture
From a valuation perspective, Abercrombie’s shares look slightly overvalued than the historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 19.15X, above the five-year median of 14.97X and the Retail-Apparel & Shoes industry’s average of 16.01X, the stock is a little expensive relative to its peers. Meanwhile, the stock currently has a Value Score of A, validating its appeal to investors.
Recent market movements show that Abercrombie’s shares have gained 65.3% in the year-to-date period compared with the industry’s rise of 9.1%. Trading at $145.88 as of May 23, shares of the company display significant momentum, which is likely to continue, as our proven model predicts that it will beat earnings estimates in the impending release.
Image Source: Zacks Investment Research
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies, which according to our model, also have the right combination of elements to post an earnings beat:
The Gap Inc. GPS has an Earnings ESP of +15.47% and currently sports a Zacks Rank of 1. The company is likely to register top and bottom-line growth when it reports first-quarter fiscal 2024 results. The consensus mark for GPS’s quarterly revenues is pegged at $3.3 billion, which suggests growth of 0.1% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s earnings has moved up by a penny to 14 cents per share in the past seven days. The consensus estimate indicates significant growth from earnings per share of 1 cent reported in the year-ago quarter.
American Eagle AEO presently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2024 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.2 billion, which suggests 6.1% growth from the figure reported in the prior-year quarter.
The consensus mark for AEO’s quarterly earnings has moved up by a penny in the past seven days to 28 cents per share. The consensus estimate suggests growth of 64.7% from the year-ago quarter’s actual.
Nordstrom JWN currently has an Earnings ESP of +41.67% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports first-quarter fiscal 2024 results. The consensus mark for JWN’s quarterly revenues is pegged at $3.2 billion, which suggests growth of 0.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Nordstrom’s loss per share has narrowed by a penny to 8 cents in the past seven days. The consensus estimate indicates a significant decline against earnings per share of 7 cents reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
