We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Despite higher inflation, higher-income consumers especially, are still willing to spend on quality fashion and apparel items.
This makes quite a few specialty retail companies look attractive among the Zacks Retail and Wholesale sector. Here is a look at two such stocks investors may want to consider buying as they gear up to report their fourth-quarter earnings this week.
Starting out is Abercrombie and Fitch, which is set to report its Q4 earnings on Wednesday, March 1. As a specialty retailer of premium, high-quality casual apparel, Abercrombie stock is currently sporting a Zacks Rank #1 (Strong Buy) in correlation with earnings estimates trending much higher for its fiscal year 2023 and FY24.
Abercrombie has a diverse product portfolio including knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outwear, personal care products, and accessories for consumers of all ages.
Image Source: Zacks Investment Research
Q4 Preview & Outlook
Abercrombie's Q4 earnings are expected at $0.85 per share, down -25% from an exeptional Q4 2022 that saw EPS of $1.14. On the top line, fourth-quarter sales are expected to be $1.18 billion, a 1% increase from the prior year quarter.
Abercrombie is now projected to round out its FY23 with earnings down -94% at $0.27 per share after an extremely tough to follow 2022 that saw EPS of $4.35. However, FY24 earnings are expected to rebound and soar 513% to $1.66 a share.
Plus, earnings estimates have soared 237% for FY23 over the last quarter and FY24 estimates are up 10%. On the top line, total sales are now forecasted to dip -1% in FY23 but rise roughly 1% in FY24 back to $3.71 billion.
Image Source: Zacks Investment Research
Performance & Valuation
Abercrombie stock is up +26% year to date to largely outperform the S&P 500’s +4% and the Retail-Apparel/Shoe Markets +10%. Abercrombie stock is still down -19% over the last year lagging the benchmark’s -9% and its Zacks Subindustry’s -17% but its valuation indicates there could be more upside to its more recent rallies.
Image Source: Zacks Investment Research
Trading at $29 per share and 24% from its 52-week high, Abercrombie stock trades at 17.3X forward earnings. This is well below its extreme decade-long highs and a 17% discount to the median of 21X while also being closer to the industry average of 15.4X.
Another retail apparel stock that looks intriguing going into its Q4 earnings report on March 1 is American Eagle Outfitters. The fashion apparel retailer sports a Zacks Rank #2 (Buy) going into the quarterly release with earnings estimates trending higher for fiscal 2023 and slightly up for FY24.
American Eagle is a specialty retailer of casual apparel, accessories, and footwear primarily for young adults. The company’s clothing apparel lineup mostly includes jeans, cargo pants, and graphic T-shirts.
Image Source: Zacks Investment Research
Q4 Preview & Outlook
The Zacks Consensus for AEO’s Q4 earnings is $0.30 per share, which would be a -14% decline year over year. Sales for the quarter are expected to be $1.47 billion, down -2% YoY.
Overall, earnings are projected to drop -59% in FY23 at $0.90 per share after a tough to compete against year and EPS of $2.19 in 2022. With that being said, FY24 earnings are expected to rebound 22% to $1.10 a share.
Sales are forecasted to be down -1% in FY23 but rise 3% in FY24 to $5.10 billion. More importantly, FY24 sales would be 26% above pre-pandemic levels with 2019 sales at $4.03 billion.
Image Source: Zacks Investment Research
Performance & Valuation
American Eagle stock is up +4% YTD to roughly match the S&P 500 but trail the Retail-Apparel/Shoe Markets +10%. The rally in AEO shares has been impressive over the last six months, up +25% to largely outperform the benchmark and its Zacks Subindustry’s +7%.
Image Source: Zacks Investment Research
American Eagles’ valuation also points to there being more upside in AEO stock. Trading at $14 per share and 32% from its 52-week high, AEO trades at 13.2X forward earnings which is nicely below the industry average of 15.4X. Plus, AEO stock trades 55% below its decade-long high of 29.2X and slightly beneath the median of 13.8X.
Bottom Line
These premium retailers look intriguing as they round out their fiscal 2023 and the rising earnings estimate revisions are a good sign that both Abercrombie and American Eagle could give better-than-expected guidance during their Q4 reports. This could lead to more upside in both stocks and extend their very impressive rallies over the last six months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
2 Apparel Stocks to Buy With Earnings Approaching
Despite higher inflation, higher-income consumers especially, are still willing to spend on quality fashion and apparel items.
This makes quite a few specialty retail companies look attractive among the Zacks Retail and Wholesale sector. Here is a look at two such stocks investors may want to consider buying as they gear up to report their fourth-quarter earnings this week.
Abercrombie & Fitch (ANF - Free Report)
Starting out is Abercrombie and Fitch, which is set to report its Q4 earnings on Wednesday, March 1. As a specialty retailer of premium, high-quality casual apparel, Abercrombie stock is currently sporting a Zacks Rank #1 (Strong Buy) in correlation with earnings estimates trending much higher for its fiscal year 2023 and FY24.
Abercrombie has a diverse product portfolio including knit and woven shirts, graphic T-shirts, fleece, jeans and woven pants, shorts, sweaters, outwear, personal care products, and accessories for consumers of all ages.
Image Source: Zacks Investment Research
Q4 Preview & Outlook
Abercrombie's Q4 earnings are expected at $0.85 per share, down -25% from an exeptional Q4 2022 that saw EPS of $1.14. On the top line, fourth-quarter sales are expected to be $1.18 billion, a 1% increase from the prior year quarter.
Abercrombie is now projected to round out its FY23 with earnings down -94% at $0.27 per share after an extremely tough to follow 2022 that saw EPS of $4.35. However, FY24 earnings are expected to rebound and soar 513% to $1.66 a share.
Plus, earnings estimates have soared 237% for FY23 over the last quarter and FY24 estimates are up 10%. On the top line, total sales are now forecasted to dip -1% in FY23 but rise roughly 1% in FY24 back to $3.71 billion.
Image Source: Zacks Investment Research
Performance & Valuation
Abercrombie stock is up +26% year to date to largely outperform the S&P 500’s +4% and the Retail-Apparel/Shoe Markets +10%. Abercrombie stock is still down -19% over the last year lagging the benchmark’s -9% and its Zacks Subindustry’s -17% but its valuation indicates there could be more upside to its more recent rallies.
Image Source: Zacks Investment Research
Trading at $29 per share and 24% from its 52-week high, Abercrombie stock trades at 17.3X forward earnings. This is well below its extreme decade-long highs and a 17% discount to the median of 21X while also being closer to the industry average of 15.4X.
American Eagle Outfitters (AEO - Free Report) )
Another retail apparel stock that looks intriguing going into its Q4 earnings report on March 1 is American Eagle Outfitters. The fashion apparel retailer sports a Zacks Rank #2 (Buy) going into the quarterly release with earnings estimates trending higher for fiscal 2023 and slightly up for FY24.
American Eagle is a specialty retailer of casual apparel, accessories, and footwear primarily for young adults. The company’s clothing apparel lineup mostly includes jeans, cargo pants, and graphic T-shirts.
Image Source: Zacks Investment Research
Q4 Preview & Outlook
The Zacks Consensus for AEO’s Q4 earnings is $0.30 per share, which would be a -14% decline year over year. Sales for the quarter are expected to be $1.47 billion, down -2% YoY.
Overall, earnings are projected to drop -59% in FY23 at $0.90 per share after a tough to compete against year and EPS of $2.19 in 2022. With that being said, FY24 earnings are expected to rebound 22% to $1.10 a share.
Sales are forecasted to be down -1% in FY23 but rise 3% in FY24 to $5.10 billion. More importantly, FY24 sales would be 26% above pre-pandemic levels with 2019 sales at $4.03 billion.
Image Source: Zacks Investment Research
Performance & Valuation
American Eagle stock is up +4% YTD to roughly match the S&P 500 but trail the Retail-Apparel/Shoe Markets +10%. The rally in AEO shares has been impressive over the last six months, up +25% to largely outperform the benchmark and its Zacks Subindustry’s +7%.
Image Source: Zacks Investment Research
American Eagles’ valuation also points to there being more upside in AEO stock. Trading at $14 per share and 32% from its 52-week high, AEO trades at 13.2X forward earnings which is nicely below the industry average of 15.4X. Plus, AEO stock trades 55% below its decade-long high of 29.2X and slightly beneath the median of 13.8X.
Bottom Line
These premium retailers look intriguing as they round out their fiscal 2023 and the rising earnings estimate revisions are a good sign that both Abercrombie and American Eagle could give better-than-expected guidance during their Q4 reports. This could lead to more upside in both stocks and extend their very impressive rallies over the last six months.