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Category: Stock Market and Abercrombie & Fitch (ANF)
Date: 24 November 2020 Stock Price of ANF: $22.00 We take a look at the 3rd quarter 2020 earnings report of Abercrombie & Fitch, a global speciality retailer of apparel and accessories for Men, Woman and Kids. The group reported sales of $819.6 million and net income of $42.2 million.
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Looking at all the fundamental metrics above Lowe's wins on the Price/Stockholders equity per share metric. Lowe's (LOW) wins when it comes to the cash as percentage of stock price. Lowe's (LOW) also has the stronger cash position with their cash as percentage of total assets being higher than that of The Home Depot (HD). "
About Abercrombie & Fitch
Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global specialty retailer of apparel and accessories for Men, Women and Kids through three renowned brands. For more than 125 years, the iconic Abercrombie & Fitch brand has outfitted innovators, explorers and entrepreneurs. Today, the brand reflects the updated attitude of the modern consumer, while remaining true to its heritage of creating expertly crafted products with an effortless, American style. The Hollister brand epitomizes the liberating and carefree spirit of the endless California summer for the teen market. abercrombie kids creates smart, playful apparel for children ages 5-14, celebrating the wide-eyed wonder of childhood.
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style. The Company operates more than 850 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce site
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style. The Company operates more than 850 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce site
Overview of Abercrombie & Fitch's 3rd quarter 2020 earnings report
Data below refers to the latest quarter unless specified otherwise:
- Total revenue: $819.6 million (down from $863.4 million for the same quarter of the previous year)
- Total revenue decreased by -5.1% over the last 12 months
- Cost of sales: $295.2 million (up from $344.5 million for the same quarter of the previous year)
- Cost of sales decreased by -14.3% over the last 12 months
- Net earnings: $42.2 million (up from $6.5 million for the same quarter of the previous year)
- Diluted earnings per share: $0.66 (up from $0.10 for the same quarter of the previous year)
- PE ratio of Abercrombie & Fitch: 9.2
- Diluted number of shares outstanding: 63.8 million (down from 68.9 million for the same quarter of the previous year)
- Cash and cash equivalents: $812.8 million
- Cash and cash equivalents per share: $12.73
- Cash and cash equivalents makes up 57.9% of Abercrombie & Fitch's market capital
- Cash and cash equivalents makes up 24.8% of Abercrombie & Fitch's total assets
- Inventories $545.5 million
- Inventories makes up 16.6% of Abercrombie & Fitch's total assets
- Stockholders’ equity in Abercrombie & Fitch: $858.8 million
- Stockholders equity per share: $13.46
- Abercrombie & Fitch is trading at 1.63 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book value of firms in the S&P 500 is 3.9
Abercrombie & Fitch management commentary on their 3rd quarter 2020 earnings
NEW ALBANY, Ohio, Nov. 24, 2020 (GLOBE NEWSWIRE) -- Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the third quarter ended October 31, 2020. These compare to results for the third quarter ended November 2, 2019
Fran Horowitz, Chief Executive Officer, said, “I am proud of our global teams and partners. Reflecting your ongoing hard work and perseverance, we delivered our best third quarter operating income in eight years. Results were fueled by 43% year-over-year digital sales growth and sequential sales improvements in our global store base. Updated product and marketing resonated with existing and new customers across brands and regions. Combined with a focused inventory management strategy, we expanded gross profit rate significantly while continuing to tightly manage expenses, leading to operating margin improvements over last year.”
”We are also pleased to announce the early exit of four additional flagship locations by the end of January 2021. This is in addition to the three previously announced fiscal 2020 natural lease expirations. With these seven closures, we should end the year with eight operating flagships down from fifteen at the beginning of the year. These actions align with our multi-year strategy of reducing dependence on tourist-driven locations to reposition within key markets and deliver a better omnichannel experience to our local customer.”
Fran Horowitz, Chief Executive Officer, said, “I am proud of our global teams and partners. Reflecting your ongoing hard work and perseverance, we delivered our best third quarter operating income in eight years. Results were fueled by 43% year-over-year digital sales growth and sequential sales improvements in our global store base. Updated product and marketing resonated with existing and new customers across brands and regions. Combined with a focused inventory management strategy, we expanded gross profit rate significantly while continuing to tightly manage expenses, leading to operating margin improvements over last year.”
”We are also pleased to announce the early exit of four additional flagship locations by the end of January 2021. This is in addition to the three previously announced fiscal 2020 natural lease expirations. With these seven closures, we should end the year with eight operating flagships down from fifteen at the beginning of the year. These actions align with our multi-year strategy of reducing dependence on tourist-driven locations to reposition within key markets and deliver a better omnichannel experience to our local customer.”
“We are encouraged by quarter-to-date results, including ongoing strong digital demand, with our customers responding favorably to new product and messaging. However, this is tempered by uncertainty regarding the potential for increased COVID-related store restrictions and our expectation for elevated shipping, handling and freight costs. As we approach the peak holiday selling period, inventories remain well-controlled and we have thoughtful plans in place to help us adapt to changing business conditions. As we have done since the start of the pandemic, we will utilize our proven playbooks to remain agile and provide the best omnichannel experience for our customers.”
Financial Position and LiquidityAs of October 31, 2020 the company had:
Financial Position and LiquidityAs of October 31, 2020 the company had:
- Cash and equivalents of $813 million. This compares to cash and equivalents of $671 million and $411 million as of February 1, 2020 and November 2, 2019, respectively.
- Inventories of $546 million, down 8% as compared to November 2, 2019.
- Long-term gross borrowings under the company’s senior secured notes of $350 million (the “Senior Secured Notes”) which mature in July 2025 and bear interest at a rate of 8.75% per annum.
- Borrowing available under the senior-secured asset-based revolving credit facility (the “ABL Facility”) of $345 million.
- Liquidity, comprised of cash and equivalents and borrowing available under the ABL Facility, of approximately $1.2 billion. This compares to liquidity of $914 million and $770 million as of February 1, 2020 and November 2, 2019, respectively.
Abercrombie & Fitch (ANF) stock price history over the last 5 years
The image below obtained from Google shows the stock price history of Abercrombie & Fitch (NYSE: ANF) for the last 5 years. And its not been a good time for Abercrombie & Fitch stockholders. 5 years ago the stock of Abercrombie & Fitch was trading at $26.70 and its currently trading at $22. That's a loss of -17.6% suffered by Abercrombie & Fitch stockholders over the last 5 years.
The stock of Abercrombie & Fitch is trading at a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Abercrombie & Fitch's stock is positive at this point in time.
The stock of Abercrombie & Fitch is trading at a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Abercrombie & Fitch's stock is positive at this point in time.
Abercrombie & Fitch (ANF) stock vs American Eagle Outfitters (AEO) stock over last 3 years
The image below shows the stock price history of Abercrombie & Fitch (ANF) stock vs American Eagle Outfitters (AEO) stock over last 3 years over the last 3 years. Both firms are active in the retail apparel sector. The summary below shows the stock price performance of these two firms over the last 3 years:
The stock of Abercrombie & Fitch (ANF) has easily outperformed that of American Eagle Outfitters (AEO) over the last 3 years.
- Abercrombie & Fitch (ANF): 27.75%
- American Eagle Outfitters (AEO): 1.47%
The stock of Abercrombie & Fitch (ANF) has easily outperformed that of American Eagle Outfitters (AEO) over the last 3 years.
Recent coverage of Abercrombie & Fitch
The extract below refers to the latest earnings from Abercrombie & Fitch as obtained from CNBC.com
Abercrombie & Fitch (ANF) – The apparel retailer earned 76 cents per share for its latest quarter, compared to expectations of a near-breakeven quarter. Revenue also beat estimates, helped by stay-at-home workers and students shopping online for Abercrombie clothing. The retailer’s shares jumped 8% in the premarket.
Read the full article
Abercrombie & Fitch (ANF) – The apparel retailer earned 76 cents per share for its latest quarter, compared to expectations of a near-breakeven quarter. Revenue also beat estimates, helped by stay-at-home workers and students shopping online for Abercrombie clothing. The retailer’s shares jumped 8% in the premarket.
Read the full article
Abercrombie & Fitch (NYSE:ANF) stock valuation
So what do we value the stock of Abercrombie & Fitch at based on their 3rd quarter 2020 earnings report? Considering the fact that the group made a profit for the 3rd quarter of 2020 but is still loss making for the 3 quarters of 2020 we have decided to value the stock of Abercrombie & Fitch at its stockholders equity per share, which is our baseline to value a loss making firm as it shows what a company is worth if they sold all their assets, paid all their liabilities and distribute the rest to stockholders. Abercrombie & Fitch's stockholders equity per share is $13.46.
We therefore believe that the stock of Abercrombie & Fitch is overvalued based on its current price of $22
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which is $13.46 in this case. A good entry point into Abercrombie & Fitch would therefore be at $12.10 or below. We expect the stock of Abercrombie Fitch to pull back from its current price to levels closer to our target price (full value price), which is also their stockholders equity per share.
We therefore believe that the stock of Abercrombie & Fitch is overvalued based on its current price of $22
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which is $13.46 in this case. A good entry point into Abercrombie & Fitch would therefore be at $12.10 or below. We expect the stock of Abercrombie Fitch to pull back from its current price to levels closer to our target price (full value price), which is also their stockholders equity per share.
Next earnings release of Abercrombie & Fitch
It is expected that Abercrombie & Fitch will release their 4th quarter and full fiscal 2020 earnings report in late February 2021
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