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Strength Seen in Victoria's Secret (VSCO): Can Its 12.4% Jump Turn into More Strength?

Zacks Equity Research
·2 min read

Victoria's Secret VSCO shares ended the last trading session 12.4% higher at $38.50. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 17.4% loss over the past four weeks.

Victoria’s Secret’s rally is buoyed by optimism regarding the company’s new share repurchase program announcement and a better than expected retail environment. The company expects to reward investors with $250 million in the form of share repurchases. The program will be initiated in open market and will likely be exhausted by fiscal 2023-end.

This retailer of lingerie, pajamas and beauty products is expected to post quarterly earnings of $2.31 per share in its upcoming report, which represents a year-over-year change of -14.4%. Revenues are expected to be $2.01 billion, down 7.8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Victoria's Secret, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on VSCO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Victoria's Secret is part of the Zacks Leisure and Recreation Products industry. Clarus Corporation (CLAR), another stock in the same industry, closed the last trading session 4.6% higher at $8.86. CLAR has returned 3.4% in the past month.

Clarus Corporation's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.22. Compared to the company's year-ago EPS, this represents a change of -51.1%. Clarus Corporation currently boasts a Zacks Rank of #3 (Hold).

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Victoria's Secret & Co. (VSCO) : Free Stock Analysis Report

Clarus Corporation (CLAR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research