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Stitch Fix (SFIX) Gains But Lags Market: What You Should Know

Zacks Equity Research

Stitch Fix (SFIX) closed the most recent trading day at $23.97, moving +0.38% from the previous trading session. This move lagged the S&P 500's daily gain of 0.42%. Elsewhere, the Dow gained 0.15%, while the tech-heavy Nasdaq added 0.66%.

Prior to today's trading, shares of the online clothing styling service had gained 1.7% over the past month. This has lagged the Retail-Wholesale sector's gain of 2.24% and the S&P 500's gain of 4.09% in that time.

Wall Street will be looking for positivity from SFIX as it approaches its next earnings report date. This is expected to be December 9, 2019. In that report, analysts expect SFIX to post earnings of -$0.06 per share. This would mark a year-over-year decline of 160%. Our most recent consensus estimate is calling for quarterly revenue of $441.04 million, up 20.42% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.03 per share and revenue of $1.91 billion. These totals would mark changes of -91.67% and +21.33%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for SFIX. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. SFIX is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that SFIX has a Forward P/E ratio of 879.79 right now. For comparison, its industry has an average Forward P/E of 13.25, which means SFIX is trading at a premium to the group.

Investors should also note that SFIX has a PEG ratio of 29.33 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Apparel and Shoes industry currently had an average PEG ratio of 1.39 as of yesterday's close.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 68, putting it in the top 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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