Abercrombie & Fitch Co.
) has outperformed the Zacks Consensus Estimate for the last 3
quarters, delivering an average beat of 36.4%. Most recently, it
topped by 47.5% in its fiscal third quarter and raised its earnings
guidance for 2012, sending shares higher for this casual apparel
This Zacks Rank #1 (Strong Buy) stock is an attractive investment
pick given its expected earnings growth of 28.1% in fiscal 2012 and
projected long-term earnings growth of 18.9%.
Third Quarter Beat
On Nov 14, Abercrombie & Fitch reported fiscal third quarter
earnings of 87 cents per share, rising more than 52% year over year
and significantly beating the Zacks Consensus Estimate of 59 cents.
The robust quarterly performance was primarily driven by strong
top-line growth along with improved margins and a lower effective
Driven by robust sales performances in the international market,
total sales advanced 9% to $1.170 billion from $1.076 billion last
year. Moreover, Abercrombie's quarterly revenue surpassed the Zacks
Consensus Estimate of $1.115 billion.
Based on the strong quarterly performance, Abercrombie raised its
earnings guidance for fiscal 2012 to between $2.85 and $3.00 per
share, compared to its earlier guidance range of $2.50 to $2.75.
Earnings Estimates Climb
Over the past 30 days, the Zacks Consensus Estimate for fiscal 2012
rose 0.3% to $2.96 per share, representing year-over-year growth of
28.1%. The Zacks Consensus Estimate for fiscal 2013 advanced 0.6%
to $3.58 over the same time frame, reflecting a year-over-year
increase of 21.1%.
Abercrombie & Fitch currently trades at a forward P/E of 16.9x,
reflecting a 15% premium to the peer group average of 14.7x. On a
price-to-book basis, shares are trading on par with the peer group
However, given the company's compelling fundamentals, the premium
is justified and well supported by its long-term estimated EPS
growth rate of 18.9%.
Shares have been steadily growing since mid-November, reflecting an
upside of about 61.5%. Abercrombie & Fitch has consistently
traded above its 200-day and 50-day moving average since Nov 13,
2012. Volume averages roughly 3,202K daily.
Founded in 1892 and based in New Albany, Ohio, Abercrombie &
Fitch Co. operates as a specialty retailer of premium, high-quality
casual apparels for men, women, and kids through a network of over
1,050 stores across the U.S., Europe, Canada, and Asia. The company
operates through Abercrombie & Fitch, abercrombie kids,
Hollister and Gilly Hicks across the United States and
Internationally. The company reports its operating results under
three segments: U.S. Stores, International Stores and
Direct-to-Consumer. Abercrombie & Fitch has a market cap of
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