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Why Should You Offload L Brands (LB) from Your Portfolio?
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L Brands, Inc. has exhibited a bearish run so far this year. The stock has plunged nearly 24% year to date compared with the Zacks categorized Retail-Wholesale industry which has witnessed a gain of roughly 6%. Dismal earnings view, top-line miss and foreign currency headwinds are hurting the stock.
The company’s top-line has missed the Zacks Consensus Estimate in the trailing five out of seven quarters. Foreign currency headwinds along with higher operating and interest expenses hurt third-quarter fiscal 2016 bottom-line results. The company now foresees short-term challenges on account of its decision to exit the swimwear category, which according to analysts have failed to generate desired results.
Management hinted that this is likely to negatively affect comparable sales at the Victoria’s Secret brand by low-single digits in fourth-quarter fiscal 2016 and high-single digits in first-half fiscal 2017.
Moreover, macroeconomic conditions in the Middle East and Turkey are likely to affect the company’s performance. Further, L brands informed that sales across its airport stores and other premium cities globally were adversely impacted by a fall in travel by consumers from Russia, the Middle East and China.
All these compelled management to lower its fiscal 2016 earnings projection. The company now projects earnings in the band of $3.56–$3.71 per share (including $0.07 per share impact from foreign currency headwinds) for fiscal 2016, down from the previous guidance of $3.70–$3.85 per share. On the other hand, the company expects fiscal fourth-quarter earnings in the range of $1.85–$2.00.
Let’s look at earnings estimate revisions of this Zacks Rank #4 (Sell) company in order to get a clear picture of what analysts are thinking about the company. In the past 30 days, the company’s earnings estimates for fiscal 2016 have declined to $3.68 from $3.73. Moreover, its earnings estimates for fiscal 2017 have moved down by 7 cents to $3.86 in the same time period.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.
Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.
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Why Should You Offload L Brands (LB) from Your Portfolio?
L Brands, Inc. has exhibited a bearish run so far this year. The stock has plunged nearly 24% year to date compared with the Zacks categorized Retail-Wholesale industry which has witnessed a gain of roughly 6%. Dismal earnings view, top-line miss and foreign currency headwinds are hurting the stock.
The company’s top-line has missed the Zacks Consensus Estimate in the trailing five out of seven quarters. Foreign currency headwinds along with higher operating and interest expenses hurt third-quarter fiscal 2016 bottom-line results. The company now foresees short-term challenges on account of its decision to exit the swimwear category, which according to analysts have failed to generate desired results.
Management hinted that this is likely to negatively affect comparable sales at the Victoria’s Secret brand by low-single digits in fourth-quarter fiscal 2016 and high-single digits in first-half fiscal 2017.
Moreover, macroeconomic conditions in the Middle East and Turkey are likely to affect the company’s performance. Further, L brands informed that sales across its airport stores and other premium cities globally were adversely impacted by a fall in travel by consumers from Russia, the Middle East and China.
All these compelled management to lower its fiscal 2016 earnings projection. The company now projects earnings in the band of $3.56–$3.71 per share (including $0.07 per share impact from foreign currency headwinds) for fiscal 2016, down from the previous guidance of $3.70–$3.85 per share. On the other hand, the company expects fiscal fourth-quarter earnings in the range of $1.85–$2.00.
Let’s look at earnings estimate revisions of this Zacks Rank #4 (Sell) company in order to get a clear picture of what analysts are thinking about the company. In the past 30 days, the company’s earnings estimates for fiscal 2016 have declined to $3.68 from $3.73. Moreover, its earnings estimates for fiscal 2017 have moved down by 7 cents to $3.86 in the same time period.
Stocks to Consider
Better-ranked stocks include Burlington Stores, Inc. (BURL - Free Report) , Zumiez, Inc. (ZUMZ - Free Report) , both these stocks sport a Zacks Rank #1 (Strong Buy), while The Tile Shop Holdings, Inc. carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.
Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>