Abercrombie & Fitch Co. (ANF) 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 retailer.
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 tax rate.
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 at 2.5x.
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 $4.01 billion.
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.
More From Zacks.com