Abercrombie & Fitch (ANF) Reports First Quarter Loss, Highest Revenue Estimate

Abercrombie & Fitch (ANF) came out with quarterly loss of $0.29 per share compared to the Zacks Consensus Estimate of a loss of $0.43. For comparison, a year earlier the loss was $0.56 per share. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of 32.56%. A quarter ago, it was expected that this teen clothing retailer would post earnings of $1.12 per share when it actually produced earnings of $1.35, delivering a surprise of 20.54%.

The company has topped consensus EPS estimates four times over the last four quarters.

Abercrombie, which belongs to the Zacks Retail – Apparel & Footwear industry, posted revenues of $733.97 million for the quarter ended April 2019, surpassing the Zacks Consensus Estimate by 0.07%. For comparison, revenues from a year ago amounted to $730.90 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Year-to-date, Abercrombie shares are up about 24.7% compared with the S&P 500’s gain of 11.8%.

What’s next for Abercrombie?

While Abercrombie has outperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to the earnings release, the trend in Abercrombie’s estimate revisions was favorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. We can therefore expect that the company’s shares will outperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.07 on $867.13 million in revenues for the coming quarter and $1.40 on $3.68 billion in revenues for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Retail – Apparel & Footwear is currently in the top 33% of over 250 Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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