ANF

Valuentum Economic Castleâ„¢ Rating Update

by

Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

What a Week in Retail: Some Good, Mostly Bad

by

The week ending January 10 brought a plethora of news that confirmed our fears: promotional activity during the shortened holiday shopping season of 2013 wasn’t just bad, it was cutthroat. Many retailers were left unable to recover from the ice and winter storms that ravaged much of the US during December/early January. Bed Bath and Beyond (BBBY) Five Below (FIVE), Pacific Sunwear (PSUN), Sears (SHLD) and Zumiez (ZUMZ) all revealed difficult performance during the period. The variant business models of the aforementioned retailers suggest weakness was widespread. Surprisingly, even discount retailing giant Family Dollar (FDO) wasn’t able to lower prices enough to keep customers in the stores. No category seemed to be spared. Needless to say, we’re not expecting much … Read more

American Eagle and the Difficulty of Investing in Teen Retailers

by

Monday after the market close, teen retailer American Eagle (click ticker for report: ) reduced its second quarter earnings outlook. After a relatively weak first quarter, the firm was generally optimistic about its prospects heading into the second quarter, predicting flat same-store sales and earnings per share of $0.19-$0.21. However, earlier this week the firm said earnings per share will now be closer to $0.10 for the second quarter, a decline of 50% compared to the same period a year ago. Same-store sales that were predicted to be flat will actually be down 7% year-over-year (compared to 8% growth in the same period a year ago). Thus, same-store sales are only about 1% higher than they were two years ago.   … Read more

Changes Flow at Abercrombie & Fitch

by

Friday morning, teen clothing retailer Abercrombie & Fitch (click ticker for report: ) announced fourth quarter results, a dividend hike, and a change in method of accounting for inventory. Revenue increased 11% year-over-year to $1.5 billion, falling slightly below consensus expectations. Earnings per share easily exceeded expectations under the retail method, growing 97% year-over-year to $2.21 per share. Under the cost method, which Abercrombie will use going forward, they grew nearly 10 fold year-over-year to $2.15 per share. Abercrombie’s new accounting method is designed to more accurately reflect gross margins and provide greater consistency with respect to inventory. Although the move will cause us to adjust our financial model, we think it will more accurately reflect the company’s operating performance. … Read more

Dividend Increases for the Week Ending February 22

by

This week was jam-packed with companies raising their quarterly cash dividends. Below we provide a list of firms that upped their dividends for the week ending February 22. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here. Firms Raising Their Dividends This Week Abercrombie & Fitch (ANF): now $0.20 per share quarterly dividend, was $0.175. Analog Devices (ADI): now $0.34 per share quarterly dividend, was $0.30. Chemung Financial (CHMG): now $0.26 per share quarterly dividend, was $0.25. Chesapeake Lodging Trust (CHSP): now $0.24 per share quarterly dividend, was $0.22. Cheviot Financial Corp. (CHEV): now $0.09 per share quarterly dividend, was $0.08 Corrections Corp of America … Read more

Abercrombie’s Earnings Surprise Doesn’t Tempt Us

by

Teen retailer Abercrombie & Fitch (click ticker for report: ) reported better than expected third-quarter earnings and issued a stronger outlook Wednesday morning. Sales grew 9% year-over-year to $1.17 billion thanks to the company’s international expansion, but it was still in line with expectations. Earnings grew 53% year-over-year to $0.87 per share, topping the consensus estimate by $0.28. Our fair value estimate, which considers not only short-term performance but also the long-term cash flow generation of the firm, remains unchanged. The only read we can really gain from Abercrombie’s results to extrapolate to the broader clothing retail space is that cotton costs have declined, which should benefit the group. Abercrombie’s gross margins were relatively strong during the period, increasing 240 basis points … Read more