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Analyst Blog

Shares of L Brands, Inc. touched a new 52-week high of $61.36 on Tuesday, Aug 13. The stock has been performing well, driven by the company’s better-than-expected comparable-store sales and upgraded guidance for second-quarter fiscal 2013. This specialty retailer has amassed a year-to-date return of 31.1%.

The average volume of shares traded over the last 3 months was approximately 2,562K. Moreover, the company currently trades at a forward P/E of 19.3x, a 21.4% premium to the peer group average of 15.9x. The last traded price is 12.5% above the Zacks Consensus average analyst price target of $54.55. Additionally, the company’s long-term estimated EPS growth rate is 11.5%.

Investors are optimistic about this Zacks Rank #3 (Hold) stock as it posted comps of 3% for the four-week period ended Aug 3, 2013 and performed better than analysts’ expectations. This specialty retailer of women’s innerwear and other apparel, beauty and personal care products witnessed a 4.4% rise in net sales to $678.4 million from $649.8 million in the prior-year period.

Buoyed by stronger-than-anticipated comps results, management now expects second-quarter fiscal 2013 earnings to come in at 60 cents per share, up from the range of 50–55 cents projected earlier. The current Zacks Consensus Estimate for the quarter matches with the company’s upgraded guidance.

The company’s history of positive earnings surprises also makes investors upbeat on the stock. We observe that L Brands has beaten the Zacks Consensus Estimate in the past 10 quarters by an average of 3.1%.

Going forward, we believe that with its operational efficiencies, new and innovative collection, and upcoming new product launches, L Brands remains well positioned to generate healthy sales. The company commands a market leading position in the lingerie, personal care, and beauty segments. The company’s exclusive assortments remain popular among consumers and set it apart from peers.

Apart from L Brands, other retail stocks such as Alliance Data Systems Corporation (ADS - Analyst Report), Michael Kors Holdings Limited (KORS - Analyst Report) and Cummins Inc. (CMI - Analyst Report) achieved new 52-week highs of $208.08, $72.98 and $128.13, respectively on Aug 13, 2013.

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