Will Abercrombie & Fitch (ANF) Beat Earnings This Quarter?

We expect the casual apparel retailer Abercrombie & Fitch Co. ANF to beat expectations when it reports second-quarter 2014 results on Aug 28.

Why a Likely Positive Surprise?

Our proven model shows that Abercrombie & Fitch may beat earnings because it has the right combination of two key components.

Positive Zacks ESP: Abercrombie & Fitch currently has an Earnings ESP of +10.00%. This is because the Most Accurate estimate stands at 11 cents per share, while the Zacks Consensus Estimate is pegged at 10 cents.

Zacks Rank #2 (Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Abercrombie & Fitch's Zacks Rank #2 and Earnings ESP of +10.00% makes us confident of a positive earnings beat.

What's Driving Better-than-Expected Earnings?

Abercrombie & Fitch Co. operates as a specialty retailer of premium, high-quality casual apparels for men, women, and kids through a network of 999 stores across the U.S., Europe, Canada, and Asia. Over the years, Abercrombie has extensively relied on its unique in-store experience as well as its line-up of leading product labels Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks in order to drive growth.

In first-quarter fiscal 2014, the company posted better-than-expected earnings results driven by its focus on executing long-term strategic plans and reaffirmed its outlook for the fiscal year. This was the third consecutive quarter when the company surpassed expectations. Furthermore, we believe that management's sustained focus on expanding global operations and improving cash flows, while maintaining a healthy balance sheet, bode well for future growth.

Abercrombie & Fitch has topped the Zacks Consensus Estimate in three of the trailing four quarters with an average positive surprise of 2.43%. In the last concluded quarter, the company surpassed the Zacks Consensus Estimate by 5.56%.

Other Stocks to Consider

Abercrombie & Fitch is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:

Limoneira Company LMNR has an Earnings ESP of +12.50% and a Zacks Rank #2 (Buy).

Shoe Carnival Inc. SCVL with an Earnings ESP of +5.88% has a Zacks Rank #2.

Zoe's Kitchen Inc. ZOES has an Earnings ESP of +50.00% and a Zacks Rank #2.

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