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Abercrombie (ANF) Q4 Earnings: What's in Store This Time?

Zacks Equity Research

Abercrombie & Fitch Co. ANF, a specialty retailer of premium, high-quality casual apparel, is slated to report fourth-quarter fiscal 2016 results on Mar 2. The question lingering in investors’ minds now is, whether the company will be able to post positive earnings surprise in the to-be-reported quarter.

Abercrombie has underperformed the Zacks Consensus Estimate in three of the past four quarters, with an average miss of 25.9%. Let’s see how things are shaping up prior to this announcement.

Abercrombie forms part of the Retail-Wholesale sector. As per the latest Earnings Preview, total earnings for the sector are expected to decline marginally by 1.2%, while revenue is projected to improve 4.7%. We observed that the Retail-Wholesale sector has lagged the broader market in the past six months. While the Zacks categorized sector rose 2.8%, the S&P 500 index advanced 8.0%, over the said time frame.

Which Way Are Estimates Treading?

Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company right before the earnings release. The Zacks Consensus Estimate of 76 cents for the fourth quarter has increased by a penny in the past 7 days, but is still substantially lower than $1.08 reported in the year-ago quarter.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Abercrombie is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Abercrombie & Fitch Company Price, Consensus and EPS Surprise

Abercrombie & Fitch Company Price, Consensus and EPS Surprise | Abercrombie & Fitch Company Quote

Abercrombie has an Earnings ESP of +1.32% as the Most Accurate estimate stands at 77 cents, while the Zacks Consensus Estimate is pegged at 76 cents. However, the company carries a Zacks Rank #5 (Strong Sell).

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing the Quarter

Abercrombie has exhibited a bearish run in the past one year. While the stock plunged 58.8%, the Zacks categorized Retail – Apparel/Shoe industry declined 17.8%.

Abercrombie has been posting dismal results for a while now, as the company’s business continues to be hurt by currency headwinds, alongside slow traffic trends at its namesake U.S. flagship and tourist stores.

Management had earlier hinted that currency headwind is likely to hurt sales and operating income in the fiscal fourth quarter. Further, comps are also expected to remain challenging compared to the prior period, while the same is anticipated to improve modestly on a sequential basis.

Nevertheless, we remain encouraged by the performance of its Hollister brand. Also, Abercrombie remains optimistic about its prospects, given its disciplined inventory and expense control.

Stocks Poised to Beat Earnings Estimates

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:

Staples, Inc. SPLS has an Earnings ESP of +4.00% and a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy Co., Inc. BBY has an Earnings ESP of +1.81% and a Zacks Rank #3.

Costco Wholesale Corp. COST has an Earnings ESP of +0.74% and a Zacks Rank #3.

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Abercrombie & Fitch Company (ANF): Free Stock Analysis Report
Best Buy Co., Inc. (BBY): Free Stock Analysis Report
Costco Wholesale Corporation (COST): Free Stock Analysis Report
Staples, Inc. (SPLS): Free Stock Analysis Report
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