Abercrombie & Fitch | The hottest trend of the season
Ticker (stock exchange) - ANF (NYSE)
Current price - $148
Target price - $194.6
Growth potential - 31.5%🔥
Investment period - 1 year
Abercrombie & Fitch is an American company that specializes in clothing production. In addition to its own name, it produces products under the Abercrombie Kids, Hollister, Gilly Hicks and Ruehl No.925 brands. Abercrombie & Fitch shares have shown impressive growth over the past 12 months (+300%) against the backdrop of strong business dynamics. At the same time, the company is still not overvalued. The fair value of Abercrombie & Fitch shares is $194.6, growth potential is 31.5%.
Investment theses
🔼Strong financial indicators.
Abercrombie & Fitch demonstrated outstanding financial results in Q1 2024 (ended May 4). The company's revenue grew by 22% y/y to $1 billion. Comparable sales grew by 21%. Adjusted earnings per share (EPS) jumped more than 5 times to $2.14. The data turned out to be significantly better than market expectations. Against the backdrop of strong quarterly results, the company also improved its annual forecast. It is expected that by the end of the 2024 fiscal year, revenue will grow by 10% instead of the previously forecasted 4-6%.
🔼 Potential for growth.
Despite the powerful rise in Abercrombie & Fitch shares over the past year, they still retain potential. The company is valued at only 16 times expected annual profits, which is slightly higher than the average for the sector, but this estimate is justified by the strong dynamics of the business. At the same time, compared to its own 5-year average for this indicator (33x), the company is noticeably undervalued.
🔽Risks.
Abercrombie & Fitch has risen significantly in price over the past year and set a high bar for expectations with its Q1 2024 financial year report. If it is not confirmed in subsequent reports, this may cause a correction in shares.
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Disclaimer
The information provided above is not an investment recommendation and does not guarantee or promise profitability. Before investing, you should assess the potential risks and rewards and determine your willingness and ability to accept such risks.
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