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Will Abercrombie (ANF) Surpass Estimates in Q2 Earnings?
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We expect Abercrombie & Fitch Co. (ANF - Free Report) to beat expectations when it reports second-quarter fiscal 2016 results on Aug 30. Last quarter, the company delivered a negative earnings surprise of 18%.
However, the company delivered positive earnings surprises in the preceding three quarters, with an average beat of 99.3% for the trailing four quarters. Let’s see how things are shaping up for this announcement.
Our proven model shows that Abercrombie & Fitch is likely to beat estimates because it has the right combination of the two key ingredients that hint at a positive surprise.
Zacks ESP: Abercrombie & Fitch currently has an Earnings ESP of +17.39%. This is because the Most Accurate estimate of a loss of 19 cents per share is narrower than the Zacks Consensus Estimate of a loss of 23 cents per share. A favorable Earnings ESP serves as a meaningful indicator of a likely positive surprise.
Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Abercrombie & Fitch’s Zacks Rank #3 and positive ESP makes us reasonably confident of a beat.
What is Driving the Better-than-Expected Results?
The company remains focused on implementing its strategies to enhance its business, develop brands and assortments, and enrich consumer experience. The company remains optimistic of its prospects, given its efficient cost management and constant focus on reviving its brands and enhancing performance. Also, the company expects the strong trend from the Hollister brand, as witnessed in the last quarter, to continue going forward. All these factors make us constructive on Abercrombie & Fitch’s upcoming results.
However, there remains a voice of caution as Abercrombie’s results have been hurt by adverse currency movements for a while now. This is because over a quarter of its total revenue comes from overseas operations. Further, the company expects the challenges it faced in the fiscal second quarter to hurt its comps and gross margin.
Though the company’s projections and our estimate indicate a loss per share in the upcoming release, our positive ESP and a Zacks Rank #3, keep us hopeful of a beat in the fiscal second quarter.
Other Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post a beat this quarter:
Dollar Tree Inc. (DLTR - Free Report) , scheduled to report earnings results on Aug 25, has an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).
Casey's General Stores Inc. (CASY - Free Report) , expected to report earnings results on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.
Fortune Brands Home & Security Inc. , expected to report earnings results on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.
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Will Abercrombie (ANF) Surpass Estimates in Q2 Earnings?
We expect Abercrombie & Fitch Co. (ANF - Free Report) to beat expectations when it reports second-quarter fiscal 2016 results on Aug 30. Last quarter, the company delivered a negative earnings surprise of 18%.
However, the company delivered positive earnings surprises in the preceding three quarters, with an average beat of 99.3% for the trailing four quarters. Let’s see how things are shaping up for this announcement.
ABERCROMBIE Price and EPS Surprise
ABERCROMBIE Price and EPS Surprise | ABERCROMBIE Quote
Why a Likely Positive Surprise?
Our proven model shows that Abercrombie & Fitch is likely to beat estimates because it has the right combination of the two key ingredients that hint at a positive surprise.
Zacks ESP: Abercrombie & Fitch currently has an Earnings ESP of +17.39%. This is because the Most Accurate estimate of a loss of 19 cents per share is narrower than the Zacks Consensus Estimate of a loss of 23 cents per share. A favorable Earnings ESP serves as a meaningful indicator of a likely positive surprise.
Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Abercrombie & Fitch’s Zacks Rank #3 and positive ESP makes us reasonably confident of a beat.
What is Driving the Better-than-Expected Results?
The company remains focused on implementing its strategies to enhance its business, develop brands and assortments, and enrich consumer experience. The company remains optimistic of its prospects, given its efficient cost management and constant focus on reviving its brands and enhancing performance. Also, the company expects the strong trend from the Hollister brand, as witnessed in the last quarter, to continue going forward. All these factors make us constructive on Abercrombie & Fitch’s upcoming results.
However, there remains a voice of caution as Abercrombie’s results have been hurt by adverse currency movements for a while now. This is because over a quarter of its total revenue comes from overseas operations. Further, the company expects the challenges it faced in the fiscal second quarter to hurt its comps and gross margin.
Though the company’s projections and our estimate indicate a loss per share in the upcoming release, our positive ESP and a Zacks Rank #3, keep us hopeful of a beat in the fiscal second quarter.
Other Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post a beat this quarter:
Dollar Tree Inc. (DLTR - Free Report) , scheduled to report earnings results on Aug 25, has an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).
Casey's General Stores Inc. (CASY - Free Report) , expected to report earnings results on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.
Fortune Brands Home & Security Inc. , expected to report earnings results on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>