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Here's Why Abercrombie (ANF) is Poised to Beat on Q1 Earnings

Abercrombie & Fitch Co. ANF is scheduled to report first-quarter fiscal 2023 results on May 24, before the opening bell.

The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $812.2 million, suggesting a 0.1% decline from that reported in the year-ago quarter. For fiscal first-quarter earnings, the consensus mark is pegged at a loss of 2 cents per share, implying an increase of 92.6% from the year-ago quarter's reported figure. The consensus estimate has narrowed by a penny in the past 30 days.

We expect the company’s fiscal first-quarter total revenues to rise 0.1% year over year to $813.4 million and the bottom line to increase 77.8% to a loss of 6 cents per share.

In the last reported quarter, the company recorded a negative earnings surprise of 4.7%. ANF’s earnings have missed the Zacks Consensus Estimate by 141.2%, on average, in the trailing four quarters.

Abercrombie & Fitch Company Price and EPS Surprise

 

Abercrombie & Fitch Company price-eps-surprise | Abercrombie & Fitch Company Quote

Factors to Note

Abercrombie has been gaining from continued momentum in the Abercrombie brand and sequential improvement in the Hollister brand. The company has been working toward rationalizing its store base by reducing its dependence on underperforming tourist-driven locations. As part of its store-optimization plans, it expected to reposition larger-format flagship locations to smaller omni-channel enabled stores.

In its last earnings report, management envisioned first-quarter fiscal 2023 net sales to be flat year over year at $813 million. The company anticipated the operating margin between flat to 2% compared with the year-ago quarter’s loss of 1% due to lower freight and raw material costs, partly offset by inflation and increased operating expenses to support investment for the 2025 Always Forward Plan initiatives.

However, the company has been reeling under elevated costs related to higher product costs and elevated cotton costs. Also, inflationary pressures have been concerning. These downsides are expected to have dented margins in the quarter under review.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Abercrombie this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Abercrombie currently has a Zacks Rank #3 and an Earnings ESP of +442.86%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies that have the right combination of elements to post an earnings beat:

Urban Outfitters URBN currently has an Earnings ESP of +2.27% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly earnings per share of 37 cents suggests an increase of 12.1% from the year-ago quarter’s reported figure.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Urban Outfitters’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.09 billion, which suggests a rise of 3.9% from the figure reported in the prior-year quarter.

Lowe’s Companies LOW currently has an Earnings ESP of 1.32% and a Zacks Rank of 3. The company is expected to register a top-line decline when it reports first-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for LOW’s quarterly revenues is pegged at $21.9 billion, which suggests a dip of 7.6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Lowe’s earnings has been unchanged at $3.54 per share in the past 30 days. However, the consensus estimate for loss suggests an improvement of 0.9% from the year-ago quarter’s reported figure of $3.51. LOW has delivered a bottom-line miss of 4.4%, on average, in the trailing four quarters.

American Eagle Outfitters AEO currently has an Earnings ESP of +9.81% and a Zacks Rank of 3.  The company is expected to register bottom-line growth when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of 17 cents suggests an increase of 6.3% from the year-ago quarter’s reported figure.

American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.06 billion, indicating an increase of 0.8% from the figure reported in the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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