Here Is Why Abercrombie & Fitch Co. (ANF) Earnings Are So Important

After opening Thursday at around $26.68, Abercrombie & Fitch Co. (NYSE:ANF) stock surged to as high as $26.76. It then made a downturn, dipping as low as $25.98. Although the stock bounced a bit into the close, it finished the day at $26.45, down -0.28 points or -1.05 percent on the day. The final volume for the day was 2.037 million, which was less than its average volume. The firm is left with a market cap of $1.75 billion and now has 66.18 million shares outstanding. Abercrombie & Fitch Co. (ANF) stock has gained 20.34 percent of market value in 21 trading days.

ANF stock has a trailing 3-year beta of 0.5, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.05 a share in the trailing twelve months. The stock’s value has surged 31.92 percent year to date (YTD) against a rise of 19.41 percent in 12 month’s time. The company’s shares still trade -10.91 percent away from its 1-year high of $29.69 and 73.1 percent up from 52-week low of $15.28. The average consensus rating on the company is 3, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a hold.

Abercrombie & Fitch Co. (ANF) will probably climb -10.85 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $35-month high price target. This represents a whopping 32.33 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $24, which represents a return potential of -9.26 percent when compared to the closing price of the stock of $26.45 on Thursday, March 14. The lowest price target for the stock is $15 — slightly more than -43.29 percent from ANF’s current share price.

History has shown that shares in Abercrombie & Fitch Co. have gone up on 20 different earnings reaction days and are predicted to add 0.11 percent when the company reports upcoming earnings. Investors will get their next glimpse of ANF’s Q1 earnings on June 03. Analysts are forecasting revenue to climb 0.3 percent to $733M in the fiscal first quarter, while earnings are seen soaring by nearly -23.21 percent to -$0.43 per share. It earned $1.35 per share, better than the $1.15, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $1.16B, better than the $1.13B analysts expected. Earnings are estimated to increase by 571.4 percent this year, 6.81 percent next year and continue to increase by 2.44 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $26.03. Below this, the next support is placed in the zone of $25.62. Till the time, the ANF stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 74.45 on daily chart, which may remain a cause for concern. If the price breaks below $25.62 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $26.81 mark may result into a pull-back move towards $27.18 level.

Shares of Abercrombie & Fitch Co. (ANF) are trading at a P/E ratio of 25.57 times earnings reported for the past 12 months. The industry ANF operates in has an average P/E of 32.9. Its P/E ratio went as low as 20.8X and as high as 196.1 over the 5-year span.Further, it is sporting a 0.49 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.85. 60.2 percent is the gross profit margin for Abercrombie & Fitch Co. and operating margin sits at 3.4 percent. Along with this, the net profit margin is 1.1 percent.