Retailer Abercrombie at Multiyear Low Despite String of EPS Beats
NEW YORK (TheStreet) -- Abercrombie & Fitch (ANF) - Get Report, which is scheduled to report quarterly results before the opening bell on Wednesday, has beaten analysts' earnings-per-share estimates for five consecutive quarters. Yet its stock has seen lower highs since October 2007 and set a multiyear intraday low last week.
Analysts expect the retailer of teen apparel to post earnings of $1.14 a share for its fiscal fourth quarter ended in January. The company is facing stiff price competition from newer and trendier retailers, and given higher wages at retailers such as Wal-Mart (WMT) - Get Report and TJX Cos. (TJX) - Get Report, Abercrombie may need to increase pay, as well.
Talk about a volatile ride. Shares of Abercrombie traded as high as $85.77 during the week of Oct. 5, 2007, and plunged 84% to as low as $13.66 during the week of Nov. 21, 2008. That was followed by an almost sixfold gain to as high as $78.25 during the week of July 22, 2011. The ups and downs have continued with smaller but significant volatility, making the stock a trading vehicle, not a long-term buy-and-hold investment.
Let's take a look at Abercrombie's performance measures, key trading levels and analysis of daily and weekly charts.
Abercrombie ($24.42) declined 13% in 2014 and is down 15% so far in 2015. The stock is 5.6% above its Feb. 26 low of $23.12.
Investors looking to buy Abercrombie on weakness following its earnings report should enter good 'til canceled limit orders to buy at monthly and annual technical levels of $19.74 and $15.37.
Investors looking to reduce holdings on strength should enter good 'til canceled limit orders to sell on strength at semiannual and quarterly technical levels of $26.05 and $26.50, respectively.
Let's take a look at the daily chart for Abercrombie.
Courtesy of MetaStock Xenith
The daily chart for Abercrombie ($24.42) shows how the stock declined around its 200-day simple moving average (green line) since the average was $47.96 on Aug. 21, 2013. The stock traded as low as $31.14 on Dec. 18, 2013 before rebounding to its 200-day SMA on Feb. 27, 2014, then at $40.19. The stock moved down along the 200-day SMA until May 28 when the average was $36.57. The stock then rebounded to as high as $45.50 on Aug. 27, and then it began the current downtrend.
The stock has been below its 200-day SMA since Sept. 25 with the average at $37.42 setting the multiyear intraday low of $23.12 on Jan. 26. The stock is below its 50-day (blue line) and 200-day simple moving averages at $26.70 and $34.52, respectively.
Let's take a look at the weekly chart for Abercrombie.
Courtesy of MetaStock Xenith
The weekly chart for Abercrombie is neutral with last Friday's close below the key weekly moving average at $25.99. Note that the momentum reading in red along the bottom of the graph is attempting to rise above the oversold threshold of 80.00 with a reading of 25.28. The upside on a close this week above $25.99 is the 200-week simple moving average (green line) of $43.64.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.