Abercrombie & Fitch Co. Stock Downgraded (ANF)
NEW YORK (
)
(NYSE:
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.7%. Since the same quarter one year prior, revenues rose by 15.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although ANF's debt-to-equity ratio of 0.03 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for ABERCROMBIE & FITCH is rather high; currently it is at 56.10%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.50% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Specialty Retail industry and the overall market, ABERCROMBIE & FITCH's return on equity is below that of both the industry average and the S&P 500.
- The share price of ABERCROMBIE & FITCH has not done very well: it is down 9.57% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
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Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer of casual apparel for men, women, and kids. The company has a P/E ratio of 20.1, below the average retail industry P/E ratio of 20.5 and above the S&P 500 P/E ratio of 17.7. Abercrombie & Fitch has a market cap of $3.93 billion and is part of the
sector and
industry. Shares are down 1.1% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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