We expect Abercrombie & Fitch Co. ANF to beat expectations when it reports fourth-quarter fiscal 20Array5 results on Mar 2.
Why a Likely Positive Surprise?
Our proven model shows that Abercrombie & Fitch is likely to beat on earnings 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 +5.2Array%. This is because the Most Accurate estimate of $Array.0Array stands above the Zacks Consensus Estimate of 96 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #Array (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. 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 an earnings beat.
What is Driving the Better-than-Expected Earnings?
Abercrombie & Fitch has outperformed the Zacks Consensus Estimate by an average of 87.Array% over the past four quarters. The company remains focused on implementing its strategies to enhance its business, develop brands and assortments, and enrich consumer experience. While these factors bode well for long-term profitability, management remains cautious with respect to the fourth quarter on account of mixed signals in the retail environment.
Nevertheless, 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 and global performance, as witnessed in the last quarter, to continue going forward. All these factors make us constructive on Abercrombie & Fitch’s upcoming results.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows these too have the right combination of elements to post an earnings beat this quarter:
Kroger Co. KR has an Earnings ESP of +Array.85% and a Zacks Rank #2.
Zumiez Inc. ZUMZ has an Earnings ESP of +2.08% and a Zacks Rank #2.
Big Lots Inc. BIG has an Earnings ESP of +0.5Array% and a Zacks Rank #3.
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