Will Abercrombie & Fitch (ANF) Miss Earnings Estimates? - Analyst Blog

Abercrombie & Fitch Co. ANF, the casual apparel retailer, is slated to report its first-quarter fiscal 2014 results before the opening bell on May 29. In the previous quarter, Abercrombie & Fitch recorded a positive earnings surprise of 28.9%. Let's see how things are shaping up for this announcement.       

Factors Influencing this Quarter

Following the robust earnings in fiscal 2013, management expects significant improvement in its business in 2014 and beyond, driven by its focus on successful execution of its long-term strategic plans. The company's strong financials provide it further flexibility. However, the company expects comps to fall in the quarter as they are depicting a negative trend.  

Earnings Whispers

Our proven model does not conclusively show that Abercrombie & Fitch is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 18 cents.

Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

GameStop Corp. GME, Earnings ESP of +5.88% and a Zacks Rank #3.

The Home Depot, Inc. HD, Earnings ESP of +0.69% and a Zacks Rank #3.

Lowe's Companies Inc. LOW, Earnings ESP of +0.98% and a Zacks Rank #3.