NEW YORK (TheStreet) -- Shares of Abercrombie & Fitch (ANF) are up 2.31% to $37.61 in pre-market trade after the company was upgraded to "buy" from "hold" by analysts at Jefferies Group (JEF) who also raised their price target to $50.
Separately, TheStreet Ratings team rates ABERCROMBIE & FITCH as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ABERCROMBIE & FITCH (ANF) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ANF's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for ABERCROMBIE & FITCH is rather high; currently it is at 63.25%. Regardless of ANF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.08% trails the industry average.
- ABERCROMBIE & FITCH has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ABERCROMBIE & FITCH reported lower earnings of $0.70 versus $2.92 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $0.70).
- ANF, with its decline in revenue, slightly underperformed the industry average of 5.9%. Since the same quarter one year prior, revenues fell by 11.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of ABERCROMBIE & FITCH has not done very well: it is down 19.99% 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. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
- You can view the full analysis from the report here: ANF Ratings Report