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Burlington, Abercrombie Hit 52-Week High: More Growth Ahead?

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The transforming Retail-Wholesale sector has its players scrambling for new ways to enrich customer experience. Driven by these efforts to attract customers, retailers like Burlington Stores, Inc. (BURL - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) are soaring to fresh highs.

In today’s evolving retail backdrop, companies are increasingly investing in e-commerce and omni-channel growth in order to capture the changing interests of customers. Moreover, these investments are some where a means to eliminate the fears of competition from e-commerce giant, Amazon (AMZN - Free Report) , which is growing leaps and bounds.

Here, we are focusing on Burlington Stores and Abercrombie, which have been riding high on robust strategies, solid financial results and impressive omni-channel endeavors, including expansion of digital presence. In fact, these endeavors have led the stocks to hit 52-week highs on Apr 3.

In the past six months, shares of Burlington Stores and Abercrombie have surged 42.9% and 72.3%, respectively, cruising ahead of the Retail-Wholesale sector’s growth of 7.7% and the S&P 500’s gain of 1%.


 

Let’s analyze these stocks individually.

Burlington Stores: A Solid Bet?

Shares of Burlington Stores hit a 52-week high of $136.10 yesterday, closing lower at $134.88. In fourth-quarter fiscal 2017, this Zacks Rank #2 (Buy) stock reported better-than-expected earnings for the 17th consecutive quarter. Also, the company has been doing well on the revenue front. The top line has not only outpaced the estimates in six out of the eight trailing quarters but also shown constant improvement over the past few quarters. Additionally, comparable store sales (comps) have improved consistently in the last few years.

In fact, in a competitive retail environment, Burlington Stores has made multiple changes to its business model to adapt to the ongoing changes in the industry. Evidently, the company’s current open to buy off-price model is helping customers to get nationally branded, fashionable, high quality and fair priced products. Additionally, it has been focusing on store expansion and believes that there is room to increase the store count to 1,000 over the long term. In fiscal 2018, the company plans to open 35 to 40 net new stores.

Abercrombie: Time to Hold?

Shares of Abercrombie touched a 52-week high of $24.95 on Tuesday, closing a tad lower at $24.87. This Zacks Rank #3 (Hold) stock looks good on account of its solid surprise trend, significant progress on strategic initiatives, strength in Hollister brand and strong DTC business. The company reported robust fourth-quarter fiscal 2017 results, wherein earnings delivered third straight positive surprise with fourth consecutive sales beat.

Meanwhile, Abercrombie remains on track with expansion of its digital presence backed by growth of direct-to-consumer and omni-channel capabilities. Its investments in mobile, omni-channel and fulfillment have significantly aided growth of the direct-to-consumer business, which delivered double-digit increase in both the United States and international markets last quarter. Notably, digital engagement with consumers has been the company’s core strength. Also, Hollister brand is gaining from the positive customer response to product innovations, emerging categories and overall customer experience. Currently, the company is aggressively expanding Hollister stores in new markets to boost the overall top line and profitability.

Wrapping Up

Analysts are also growing bullish on these stocks as evident from solid uptrend in earnings estimate revisions in the last 30 days. For fiscal 2018, the Zacks Consensus Estimate of $5.84 for Burlington Stores and 68 cents for Abercrombie moved north by 47 cents and 19 cents, respectively.

Both these stocks have a VGM Score of A. Moreover, the expected long-term earnings growth rate for Burlington Stores is pegged at 18.6%, while it is 14% for Abercrombie. This clearly indicates that these companies are likely to continue with their spectacular performances, at least in terms of earnings.

Not Done Yet? Check This Retail Stock

Macy's, Inc. (M - Free Report) has a long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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