Abercrombie & Fitch Co. : Violent downward move
Abercrombie and Fitch’s market cap has lost 50% in a few months. The group announced a profit warning for its fourth quarter with a sharp reduction in earnings. Having difficulties on international markets, the brand has suffered poor sales season in the United States. Numerous sales promotion and higher cotton prices have degraded margins. Sales on seasonal clothing declined due to the mild winter climate.
The management has revised its forecasts down for earning per share in a range of $3.5 and $3.75, less than consensus estimations which expected $4.22.
Technically, the stock was in a accumulation phase. The downward trend occurs by bearish gaps. The last one might be an exhausting gap.
However, the bearish move should continue to reach $36 weekly support. On this level, it would be interesting to gamble fast technical rebounds. The current oversold level shows the implementation of upward trend.
In this case, investors could take a buy order $36 to aim at $44. A stop loss should be fixed at $34.
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Valuation |
2014e |
2015e |
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PER (Price / EPS)
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15,4x |
13,3x |
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Capitalization / Revenue
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0,88x |
0,83x |
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EV / Revenue
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0,72x |
0,64x |
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EV / EBITDA
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5,13x |
4,39x |
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Yield (DPS / Price)
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1,40% |
1,44% |
| Profitability |
2014e |
2015e |
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Operating Margin (EBIT / Sales)
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9,10% |
9,83% |
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operating laverage (Delta EBIT / Delta Sales)
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0,42x |
2,42x |
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Net Margin (Net Profit / Revenue)
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5,84% |
6,34% |
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ROA (Net Profit / Asset)
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9,77% |
10,7% |
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ROE (Net Profit / Equities)
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14,9% |
16,4% |
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Rate of Dividend
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21,5% |
19,2% |
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