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Abercrombie (ANF) Records 102% YTD Surge: Is it Too Late to Buy?
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Abercrombie & Fitch Company (ANF - Free Report) has been gathering laurels in recent years after the tremendous sales declines witnessed in 2010, driven by its unwavering commitment to offering premium, high-quality casual apparel for men, women and kids. A well-known name among the teens, Abercrombie has worked up its path to success, making a strong comeback, thanks to its rebranding efforts, with a strategic focus on jeans for millennials.
These efforts paid off well, as reflected by strong sales growth for each of its brands, particularly the Abercrombie brand.
Backed by its perseverance, the New Albany, OH-based company has gained significant momentum, outperforming its industry peers, the broader sector and the S&P 500 index in the first half of fiscal 2024. Shares of Abercrombie have seen a whopping rise of 102.3% year to date, leaving behind the industry's rally of just 9.4%. The stock also outperformed the broader Zacks Retail-Wholesale sector and the S&P 500's respective growth of 13.1% and 17.4% in the same period.
Stock Performance (YTD)
Image Source: Zacks Investment Research
Additionally, the Abercrombie stock performance suggests a stark contrast with its rival American Eagle Outfitters (AEO - Free Report) , which saw its shares decline 6.4% year to date. The stock has also surpassed its peers, including The Gap Inc. (GPS - Free Report) and Urban Outfitters Inc. (URBN - Free Report) , which recorded gains of 12.1% and 22.3%, respectively, in the same period. This disparity highlights a significant rally in Abercrombie’s stock price relative to its key rivals.
Abercrombie Vs. Peers
Image Source: Zacks Investment Research
At the current price of $178.53, the ANF stock trades closer to its 52-week high of $196.99 reached on May 29, 2024. The current stock price reflects only a 9.2% discount from its 52-week high mark. This indicates that the stock has further upside potential from here.
Furthermore, ANF trades above its 50 and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception, and confidence in Abercrombie’s financial health and prospects.
Abercrombie’s Stock Trades Above 50 and 200-Day Moving Average
Image Source: Zacks Investment Research
Revitalized & Resilient: ANF's Journey to Success
The stock’s upward trajectory is well supported by its ability to tap favorable trends in the fashion industry, digital endeavors and robust strategies, including store-optimization plans.
Through strategic transformation efforts led by new leadership, Abercrombie managed to reinvent its brands and reclaim its position in the retail market. In the process, the company shifted the brand’s image from exclusivity to inclusivity, embracing a more diverse range of models in advertising campaigns and offering a wider array of sizes.
Additionally, management’s renewed emphasis on product quality and innovation played the trick for Abercrombie. The company’s product lines were revamped to capture current fashion trends while keeping its legacy of offering classic, casual style. This helped attract new customers and retain existing ones.
The company modernized its stores, transforming them into inviting and comfortable spaces, encouraging shoppers to linger and explore. Additionally, it invested in a seamless e-commerce platform featuring personalized recommendations, easy navigation and hassle-free returns.
These strategic initiatives led to improved financial performance, with notable increases in sales and profitability.
Overall, Abercrombie's strategic transformation has set it on a path of sustainable, profitable growth for the long term. As it continues to innovate and adapt to market trends, the company is well-positioned to maintain its upward trajectory and deliver value to shareholders.
Upward Estimate Trajectory
For fiscal 2024, the Zacks Consensus Estimate for ANF’s sales and EPS implies 10.4% and 47.3% year-over-year growth, respectively. The consensus mark for fiscal 2025 sales and earnings indicates 4.4% and 2% year-over-year growth, respectively.
The Zacks Consensus Estimate for ANF’s fiscal 2024 and 2025 earnings per share rose 3.5% and 3.3%, respectively, in the last 30 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
Image Source: Zacks Investment Research
Returns Higher Than the Industry
Return on invested capital (ROIC) has outperformed the industry average in the trailing 12-month period. ROIC for ANF is pegged at 23.53% compared with the industry average of 6.48%. The high ROIC indicates the company's ability to use capital effectively to generate profitable returns. A high ROIC is often considered a positive indicator of a company's financial health and operational efficiency.
Image Source: Zacks Investment Research
ANF’s trailing 12-month Return on Equity (ROE) is 44.83%, significantly ahead of the industry average of 21.69%. A high ROE is generally seen as a positive indicator of a company's financial performance, efficiency and profitability. This suggests that the company efficiently utilizes shareholders' equity to generate earnings.
Image Source: Zacks Investment Research
Is Abercrombie’s Premium Valuation Justified?
Abercrombie is currently trading at a significant premium to the industry peers on a forward 12-month price-to-sales (P/S) ratio, as evidenced by its forward 12-month P/S ratio of 1.89X. This valuation is above its five-year median of 0.40X and surpasses the broader industry’s multiple of 1.06X. Moreover, the company’s current valuation is close to its five-year high of 2.10X, suggesting that shares are somewhat expensive on a relative basis.
While this might be perceived as a risk, the premium is justified due to Abercrombie’s consistent financial performance and growth prospects, driven by its successful rebranding efforts and strategic focus on key products.
ANF Forward P/S Valuation (5-Year)
Image Source: Zacks Investment Research
Is It Too Late to Buy the Stock?
The company’s solid price momentum, coupled with high ROIC and ROE, demonstrates its exceptional financial health and operational efficiency. These positive traits suggest adding the stock right away to one's portfolio.
Given the pricey valuation and the stock’s recent rally, new investors with lesser risk appetite may prefer to wait for the stock to retract some of its recent gains, providing a better entry point.
Those already invested in the stock may choose to book some profits by selling a portion of their investment. This strategy enables you to retain a position if the stock continues its upward trajectory while securing some gains in case the stock pulls back to encounter a decline.
Image: Bigstock
Abercrombie (ANF) Records 102% YTD Surge: Is it Too Late to Buy?
Abercrombie & Fitch Company (ANF - Free Report) has been gathering laurels in recent years after the tremendous sales declines witnessed in 2010, driven by its unwavering commitment to offering premium, high-quality casual apparel for men, women and kids. A well-known name among the teens, Abercrombie has worked up its path to success, making a strong comeback, thanks to its rebranding efforts, with a strategic focus on jeans for millennials.
These efforts paid off well, as reflected by strong sales growth for each of its brands, particularly the Abercrombie brand.
Backed by its perseverance, the New Albany, OH-based company has gained significant momentum, outperforming its industry peers, the broader sector and the S&P 500 index in the first half of fiscal 2024. Shares of Abercrombie have seen a whopping rise of 102.3% year to date, leaving behind the industry's rally of just 9.4%. The stock also outperformed the broader Zacks Retail-Wholesale sector and the S&P 500's respective growth of 13.1% and 17.4% in the same period.
Stock Performance (YTD)
Image Source: Zacks Investment Research
Additionally, the Abercrombie stock performance suggests a stark contrast with its rival American Eagle Outfitters (AEO - Free Report) , which saw its shares decline 6.4% year to date. The stock has also surpassed its peers, including The Gap Inc. (GPS - Free Report) and Urban Outfitters Inc. (URBN - Free Report) , which recorded gains of 12.1% and 22.3%, respectively, in the same period. This disparity highlights a significant rally in Abercrombie’s stock price relative to its key rivals.
Abercrombie Vs. Peers
Image Source: Zacks Investment Research
At the current price of $178.53, the ANF stock trades closer to its 52-week high of $196.99 reached on May 29, 2024. The current stock price reflects only a 9.2% discount from its 52-week high mark. This indicates that the stock has further upside potential from here.
Furthermore, ANF trades above its 50 and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception, and confidence in Abercrombie’s financial health and prospects.
Abercrombie’s Stock Trades Above 50 and 200-Day Moving Average
Image Source: Zacks Investment Research
Revitalized & Resilient: ANF's Journey to Success
The stock’s upward trajectory is well supported by its ability to tap favorable trends in the fashion industry, digital endeavors and robust strategies, including store-optimization plans.
Through strategic transformation efforts led by new leadership, Abercrombie managed to reinvent its brands and reclaim its position in the retail market. In the process, the company shifted the brand’s image from exclusivity to inclusivity, embracing a more diverse range of models in advertising campaigns and offering a wider array of sizes.
Additionally, management’s renewed emphasis on product quality and innovation played the trick for Abercrombie. The company’s product lines were revamped to capture current fashion trends while keeping its legacy of offering classic, casual style. This helped attract new customers and retain existing ones.
The company modernized its stores, transforming them into inviting and comfortable spaces, encouraging shoppers to linger and explore. Additionally, it invested in a seamless e-commerce platform featuring personalized recommendations, easy navigation and hassle-free returns.
These strategic initiatives led to improved financial performance, with notable increases in sales and profitability.
Overall, Abercrombie's strategic transformation has set it on a path of sustainable, profitable growth for the long term. As it continues to innovate and adapt to market trends, the company is well-positioned to maintain its upward trajectory and deliver value to shareholders.
Upward Estimate Trajectory
For fiscal 2024, the Zacks Consensus Estimate for ANF’s sales and EPS implies 10.4% and 47.3% year-over-year growth, respectively. The consensus mark for fiscal 2025 sales and earnings indicates 4.4% and 2% year-over-year growth, respectively.
The Zacks Consensus Estimate for ANF’s fiscal 2024 and 2025 earnings per share rose 3.5% and 3.3%, respectively, in the last 30 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
Image Source: Zacks Investment Research
Returns Higher Than the Industry
Return on invested capital (ROIC) has outperformed the industry average in the trailing 12-month period. ROIC for ANF is pegged at 23.53% compared with the industry average of 6.48%. The high ROIC indicates the company's ability to use capital effectively to generate profitable returns. A high ROIC is often considered a positive indicator of a company's financial health and operational efficiency.
Image Source: Zacks Investment Research
ANF’s trailing 12-month Return on Equity (ROE) is 44.83%, significantly ahead of the industry average of 21.69%. A high ROE is generally seen as a positive indicator of a company's financial performance, efficiency and profitability. This suggests that the company efficiently utilizes shareholders' equity to generate earnings.
Image Source: Zacks Investment Research
Is Abercrombie’s Premium Valuation Justified?
Abercrombie is currently trading at a significant premium to the industry peers on a forward 12-month price-to-sales (P/S) ratio, as evidenced by its forward 12-month P/S ratio of 1.89X. This valuation is above its five-year median of 0.40X and surpasses the broader industry’s multiple of 1.06X. Moreover, the company’s current valuation is close to its five-year high of 2.10X, suggesting that shares are somewhat expensive on a relative basis.
While this might be perceived as a risk, the premium is justified due to Abercrombie’s consistent financial performance and growth prospects, driven by its successful rebranding efforts and strategic focus on key products.
ANF Forward P/S Valuation (5-Year)
Image Source: Zacks Investment Research
Is It Too Late to Buy the Stock?
The company’s solid price momentum, coupled with high ROIC and ROE, demonstrates its exceptional financial health and operational efficiency. These positive traits suggest adding the stock right away to one's portfolio.
Given the pricey valuation and the stock’s recent rally, new investors with lesser risk appetite may prefer to wait for the stock to retract some of its recent gains, providing a better entry point.
Those already invested in the stock may choose to book some profits by selling a portion of their investment. This strategy enables you to retain a position if the stock continues its upward trajectory while securing some gains in case the stock pulls back to encounter a decline.
Additionally, Abercrombie currently sports a Zacks Rank #1 (Strong Buy) and boasts a Value Score of B, making it an attractive investment option, according to Zacks' proprietary methodology. You can see the complete list of today's Zacks #1 Rank stocks here.