Will Abercrombie & Fitch's (ANF) Q4 Earnings Disappoint? - Analyst Blog
Abercrombie & Fitch Co. ANF, a specialty retailer of premium, high-quality casual apparel, is slated to report fourth-quarter fiscal 2014 results on Mar 4, before the opening bell. In the last quarter, the company had delivered a positive earnings surprise of 2.4%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Abercrombie & Fitch has been in troubled waters owing to soft traffic, continued weakness in its Hollister brand and stiff competition from other fast-fashion retailers. The company has been posting negative comparable-store sales for 11 straight quarters, highlighting its persistent weakness. Further, management warned of difficult conditions through the fourth quarter, anticipating weakness in its top line to prevail. Consequently, it lowered its earnings outlook for fiscal 2014 to a band of $1.50–$1.65 per share from $2.15–$2.35 predicted earlier. In light of this weak outlook, we believe the company’s upcoming results will fail to impress and hence, refrain from building hopes on the same.
Earnings Whispers
Our proven model does not conclusively show that Abercrombie & Fitch is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Abercrombie & Fitch is currently pegged at -6.14%. This is because the Most Accurate estimate of $1.07 stands below the Zacks Consensus Estimate of $1.14.
Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Kroger Co. KR has an Earnings ESP of +6.74% and a Zacks Rank #2 (Buy).
Casey's General Stores Inc. CASY has an Earnings ESP of +30.14% and a Zacks Rank #2.
Zumiez, Inc. ZUMZ has an Earnings ESP of +1.27% and a Zacks Rank #2.
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