L Brands (LB) Stock Gains Today After Company Raises Earnings Forecast

NEW YORK (TheStreet) -- L Brands (LB) shares are up 2% to $73.91 on Tuesday after the specialty retail operator raised its third quarter earnings forecast following the closing bell on Monday.

The Victoria Secret and Bath and Body Works store operator said that it now expects to see third quarter earnings between 38 cents and 40 cents for the quarter, a significant improvement over the 26 cents to 31 cents guidance it had previously forecast.

The company is scheduled to release its earnings results on November 19 with analysts expecting earnings of 32 cents per diluted share on revenue of $2.3 billion.

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TheStreet Ratings team rates L BRANDS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate L BRANDS INC (LB) a BUY. This is driven by a number of strengths, 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 revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LB's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • L BRANDS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, L BRANDS INC increased its bottom line by earning $3.05 versus $2.54 in the prior year. This year, the market expects an improvement in earnings ($3.21 versus $3.05).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 5.6% when compared to the same quarter one year prior, going from $178.00 million to $188.00 million.
  • Net operating cash flow has increased to $535.00 million or 12.86% when compared to the same quarter last year. Despite an increase in cash flow, L BRANDS INC's average is still marginally south of the industry average growth rate of 20.30%.
  • You can view the full analysis from the report here: LB Ratings Report
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