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Carter's Inc. CRI has shown a steady growth in recent times, with its stock price increasing by 10.5% in just a month. This rise is attributed to the launch of its "More Than Just Cute" back-to-school campaign, which focuses on the practical features of its children's apparel. By collaborating with the agency Mischief for the first time, Carter's is targeting millennial and Gen Z parents. The campaign's emphasis on functionality and style helps the company connect with these younger parents.
However, Carter's has experienced a more volatile performance over the past six months, with its stock price declining by 12.7%, slightly better than the broader industry's decline of 14.8%. In contrast, the S&P 500 has gained 9.7% in the same period. The company's dismal performance is due to the curtailed consumer discretionary spending, owing to rising inflation and higher interest rates.
Carter’s current stock price of $70.12 reflects a 27.3% discount from its 52-week high of $88.03. Moreover, Carter's stock has fallen below critical technical threshold of its 200-day moving average. The moving average is an important indicator for gauging market trends and momentum. The breach of this threshold heightens investor concerns about the stock’s short-term outlook.
Factors Derailing Carter's Momentum
Carters is challenged by soft top-line trends, reflected by a 6% decline in the second quarter of 2024, following a decline of 4.9% in the first quarter. The company cited inflation, higher interest rates and reduced discretionary spending as reasons for the sales decline.
Sales in the U.S. Retail segment underperformed this quarter, driven by lower traffic and weaker conversion rates. Comparable sales dropped 12%, falling slightly below expectations. The quarter's slow start can be attributed to an early Easter holiday and delayed warmer weather in April.
Carter’s has been witnessing soft online sales trends due to the recent change in consumer behavior. The company noted that consumer behavior has recently shifted to more deliberate store visits for immediate needs, contrasting with the more impulsive nature of e-commerce purchases. This led to a 16% decline in e-commerce sales during the second quarter of 2024. This downturn was attributed to reduced online traffic and slowdown in consumer spending.
Bleak Outlook of CRI’s Stock
Several risks including a challenging macroeconomic environment, wavering consumer confidence, rising inflation and heightened promotional activity continue to weigh on CRI’s performance. These factors have collectively impacted consumer spending habits, profit margins and overall demand for discretionary items. Ongoing economic uncertainties are expected to result in increased discounting, affecting CRI’s pricing power and revenue growth in the coming months.
For the third quarter, the company expects net sales to be $735-$755 million, indicating a decline from $792 million recorded in the year-ago quarter. Adjusted earnings are expected to be $1.10-$1.35 per share, down from $1.84 reported in the prior-year quarter. In the U.S. Wholesale segment, CRI anticipates sales to be flat to down in the low single digits year over year, while sales in International is estimated to decline in the mid to high single digits.
Downward Estimate Trajectory
Reflecting the negative sentiment around Carter's, the Zacks Consensus Estimate for 2024 and 2025 have seen downward revisions. In the past 60 days, analysts have lowered estimates for 2024 by 22.0% to $4.90 and for 2025 by 26% to $4.86 per share. This implies a year-over-year earnings decline of 20.8% and 0.9%, respectively, for 2024 and 2025.
Final Words on Carter’s Stock
Quite apparent, Carter’s weak performance, evidenced by a consistent decline in comparable sales and a lack of recovery despite seasonal improvements, has weighed on its performance. If the company reports disappointing earnings results or revises its future earnings guidance downward, this could signal deeper problems within the company.
These factors suggest that it may be wise to steer clear of this Zacks Rank #4 (Sell) stock until positive developments shore up.
Three Better-Ranked Stocks to Consider
Some better-ranked stocks in the Consumer Discretionary space are Wolverine World Wide WWW, GIII Apparel Group GIII and Steven Madden, Ltd. SHOO.
Wolverine World Wide designs, manufactures and distributes a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago reported figures. The consensus mark for EPS reflects significant growth to 85 cents from 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 7.5%, on average.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It carries a Zacks Rank #1 at present.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Steven Madden designs, sources, markets, and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
Zacks Investment Research
Ralph Lauren Corporation RL stock has been trending up the charts in the past year, recording growth of 64.1% against the broader Consumer Discretionary sector’s return of 10.1% and the Zacks Textile - Apparel industry‘s 2.8% decline. RL’s shares also surpassed the S&P 500 index’s appreciation of 27.9% in a year.
Currently priced at $181.44, Ralph Lauren stock is trading at 5.5% to its 52-week high of $192.03, reached on March 21, 2024. However, it is trading at a 67.1% premium to its 52-week low mark.
RL’s Strategies Drive Growth
Ralph Lauren’s stock performance is due to its progress on ‘Next Great Chapter: Accelerate Plan’ and digital efforts. As part of the plan, the company is focused on elevating its lifestyle brand, expanding core and other businesses and strengthening its presence in key cities. It is enhancing its global lifestyle brands by offering premium products that align with evolving consumer preferences. Its strategy, which includes product elevation, personalized promotions, disciplined inventory management and a favorable channel and geographic mix, is proving effective.
This approach supports Ralph Lauren’s financial goals. Management forecasted mid-to-high-single-digit compounded annual revenue growth in constant currency during the fiscal 2022-2025 period. Operating profit growth is expected to outpace revenue growth, with the operating margin projected to reach at least 15% by fiscal 2025 in constant currency. Modest gross margin improvements and controlled expenses will support operating margin expansion. Capital expenditures are expected to remain in the band of 4-5% of revenues annually and the company plans to return $2 billion to shareholders via dividends and share repurchases by fiscal 2025.
RL continues to invest in key priorities like marketing, digital growth and ecosystem expansion in major cities. Its direct-to-consumer (DTC) channels, including stores and digital commerce, are performing well, with significant progress in mobile, omnichannel and fulfillment investments. In the latest quarter, RL added 1.3 million new consumers through its DTC business, with digital sales increasing 14% in Europe and 21% in Asia.
RL's Price Performance
RL’s Earnings Estimate Revisions
Given the positive sentiments regarding the stock, the Zacks Consensus Estimate for fiscal 2025 and 2026 has been northbound. In the past 60 days, the consensus estimate for earnings per share (EPS) for the current fiscal year has been revised 1.5% to $11.24 for fiscal 2025 and 0.2% to $12.56 for fiscal 2026. This implies year-over-year earnings growth of 9% and 11.8%, respectively, for fiscal 2025 and 2026.
Hurdles in RL’s Growth Path
Ralph Lauren, like other lifestyle brands, faces macroeconomic challenges such as inflation, supply-chain issues and shifting consumer behavior. Management expressed caution about the global economic and consumer outlook. Also, unfavorable foreign currency impacts are expected to affect gross margins by 40 basis points and operating margins by 50 basis points in the upcoming quarter.
Softness in its wholesale channel in North America is another setback for the company. Higher promotions and an unfavorable wholesale timing shift have been affecting the segment. The North America wholesale business reported a 13% decline in revenues in first-quarter fiscal 2025, due to receipt timing shifts and lower product sales to the off-price wholesale division. This resulted in the North America segment reporting a 4% year-over-year decline in revenues, with 4% fall in digital revenues.
Management anticipates wholesale declines to moderate through the remainder of fiscal 2025, with the potential of a restock in well-performing core products.
RL Stock’s Valuation
Ralph Lauren stock is trading at a premium valuation relative to the industry. Going by the price/earnings ratio, RL stock is currently trading at 15.31 on a forward 12-month basis, higher than 12.38 of the industry. Also, it is trading higher than its median of 14.48.
How to Play the RL Stock?
Ralph Lauren’s robust strategies, including the Next Chapter Plan and digital endeavors, position it well for long-term growth. However, macroeconomic uncertainties and soft North America performance are likely to be headwinds in the near term.
The company's steady uptrend with a pricey valuation signals a cautious approach for investors willing to enter at these levels. For existing investors, retaining the stock seems to be a prudent choice, considering the company’s long-term growth potential. The company’s Zacks Rank #3 (Hold) supports our thesis.
Stocks to Consider
We have highlighted three better-ranked stocks, namely, G-III Apparel Group GIII, Crocs CROX and Royal Caribbean RCL.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.1% and 71.1%, respectively, from the year-ago levels.
Zacks Investment Research
Crocs, Inc. CROX has been making smart moves by diversifying its product range to attract more consumers. It continues to innovate with new product lines such as sandals and boots, which is driving product diversification and increasing customer appeal across different seasons.
The brand's commitment to sustainability is evident through its use of bio-circular Croslite, which now accounts for over 80% of its materials, including in its iconic Classic Clog. This innovation maintains Crocs' signature style, comfort and durability while fostering its efforts to reduce carbon footprint.
In 2021, Crocs set an ambitious goal to achieve 50% bio-circular content in its Croslite material by 2030. By August 2024, the brand was on track, having already reached 25% bio-circular content within just three years.
Factors Driving CROX Brands, Partnerships and Margins
Crocs is advancing its long-term strategy with key initiatives focused on sustainable growth. The company’s approach centers on three main pillars. These include elevating iconic products across brands to boost awareness and relevance, strategically investing in Tier 1 markets to increase market share through enhanced talent, marketing, digital and retail expansion, and diversifying its product range to appeal to a broader consumer base.
Crocs has been capitalizing on strong consumer demand across its Crocs and HEYDUDE brands, supported by effective pricing strategies. For HEYDUDE, the company is focused on strengthening its North American presence and building the Wendy and Wally franchises. New partnerships, like a Corona-themed collection featuring Wally, Wendy and Hudson styles, and the Denim and Dudes collaboration with Lee, have expanded its international reach. Crocs is also concentrating on key product offerings, including Stretch Subs, Stretch Canvas and Funk Mono.
Global brand awareness and desirability are on the rise for Crocs, with partnerships ranging from iconic brands like Toy Story and Hello Kitty to luxury collaborations with Simone Rocha. The launch of Echo Storm, available through direct-to-consumer channels and retailers like Foot Locker and JD Sports, further enhances the brand’s market position.
Crocs has benefited from declining freight costs, which have supported gross margin growth. The Crocs brand's adjusted gross margin increased by 330 basis points year over year, driven by lower inbound freight, favorable product costs, selective international price increases and reduced discounting. The HEYDUDE brand's adjusted gross margin also expanded by 200 basis points, owing to reduced freight costs and a favorable channel mix, though partially offset by infrastructure investments.
CROX’s Promising Vision
The company aims to exceed $5 billion in revenues by 2026 at a five-year compound annual growth rate of more than 17%. This target is expected to be achieved through robust digital sales, increased market share for sandals, growth in Asia and innovations in product and marketing. Management anticipates a four-fold increase in revenues from sandals by 2026.
The upcoming quarters look promising for Crocs, with third-quarter fiscal 2024 revenues expected to grow 3-5% year over year and Crocs brand revenues projected to rise 7-9%. This Zacks Rank #2 (Buy) company expects growth for HEYDUDE in the fourth quarter, supported by favorable comparisons, new retail stores, wholesale timing and international expansion. The company remains on track to achieve 3-5% overall revenue growth for 2024 at constant currency.
What’s More for CROX Stock?
Given Crocs' solid revenue growth projections, strategic initiatives, margin improvements, successful partnerships and focus on sustainability, the stock presents a compelling investment opportunity for those looking to capitalize on the company’s growth trajectory.
Buoyed by these initiatives, the company is well poised for long-term growth objectives. Shares of CROX have gained 4.6% against the industry’s decline of 19% in the past six months.
Three Other Stocks Showing Potential
Some other top-ranked stocks are Wolverine World Wide WWW, GIII Apparel Group GIII and Steven Madden, Ltd. SHOO.
Wolverine World Wide designs, manufactures and distributes of a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year sales indicates a decline of almost 23% from the year-ago reported figures. The consensus mark for EPS reflects significant growth to 85 cents from 5 cents reported in the prior year. WWW has a trailing four-quarter earnings surprise of 7.5%, on average.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It carries a Zacks Rank #1 at present.
GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
Zacks Investment Research
Zumiez Inc. ZUMZ has demonstrated strong upward momentum, consistently trading above both its 200-day and 100-day simple moving averages (SMA), which are important indicators of price stability and long-term bullish trends. As of Friday, ZUMZ was trading at $22.44, which surpassed both its 200-day SMA of $19.36 and its 100-day SMA of $21.51, highlighting a continued uptrend.
SMA is a key tool in technical analysis used to assess price trends by smoothing out short-term fluctuations, offering a clearer view of the stock's longer-term direction. This technical strength, along with the stock's sustained momentum, reflects positive market sentiment and investor confidence in Zumiez's financial health and growth prospects.
The company has seen a substantial 36.2% jump in its stock price over the past year compared with the Zacks Retail-Apparel and Shoes industry’s 27.2% growth. Also, it outpaced the broader Retail-Wholesale sector's 24.2% growth and the S&P 500 index's 25.7% rise over the said period. Currently, ZUMZ is trading 28.5% below its 52-week high of $31.37, reached on Sept. 6, 2024.
From a valuation perspective, Zumiez’s shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-sales ratio of 0.47, which is below the five-year median of 0.58 and the industry’s average of 1.12, the stock offers value for investors seeking exposure to the sector. Moreover, ZUMZ’s current Value Score of A bodes well.
Zumiez Gains on Customer-Centric Focus, Cost Management
Zumiez’s strategic emphasis on a customer-centric business model, strong brand partnerships and careful cost management drove positive results in the second quarter of fiscal 2024. The company has invested in advanced technology to improve the shopping experience across all channels, enhancing its logistics and omnichannel capabilities, which has further solidified its competitive position.
In the second quarter, total sales grew 8.1% year over year to $210.2 million, primarily fueled by the strength of the North American market, where sales rose 10.4%. Comparable sales increased 3.6%, supported by higher average unit retail prices and a greater number of units sold per transaction. The early back-to-school season also played a role, contributing around 530 basis points to net sales growth.
Zumiez’s private label brands, which made up 23% of sales in fiscal 2023, continue to capture market share, appealing to value-conscious consumers. With plans to expand its private-label offerings in 2024, the company is well-positioned for sustained revenue growth. Gross profit improved to $71.8 million in the second quarter. The gross margin was 34.2%, up 250 basis points from the previous year, due to reduced store occupancy and distribution costs, among other factors.
In Europe, Zumiez has shifted from rapid store expansion to existing store productivity optimization, with a strategic push toward full-price selling. This change has already improved merchandising margins in the region. Additionally, the company has been closing underperforming stores in North America while expanding in key markets globally, alongside initiatives to optimize labor and reduce logistics costs to enhance long-term profitability.
ZUMZ’s International Sales Under Pressure
Despite strong results in North America, Zumiez's international sales, particularly in Europe, declined 2.6% year over year to $33.9 million in the second quarter, with a 7.6% drop in international comparable sales. The shift to full-price selling in a tough retail environment has pressured growth, raising concerns about the company's ability to improve performance in key international markets. Continued weakness is likely to impact overall revenue growth.
Zumiez Q3 & Fiscal 2024 Guidance
Nonetheless, Zumiez remains optimistic about its third-quarter and full-year performance. The company forecasts third-quarter sales to be between $221 million and $225 million, reflecting a 2-4% year-over-year increase, with comparable sales up 12.1% through Sept. 2. Despite macroeconomic uncertainties, it anticipates low single-digit sales growth for fiscal 2024, driven by stable revenue and ongoing cost efficiencies, supporting positive operating margins.
Final Thoughts
Investors should consider ZUMZ as a promising stock due to its strong technical performance and positive financial outlook. The company's ability to trade above key moving averages, along with consistent growth in North American sales and expansion in private label offerings, positions it well for growth.
While international sales, particularly in Europe, remain a challenge, Zumiez’s strategic focus on cost management, efficiency improvements and omnichannel capability expansion provides a solid foundation for sustained profitability. Trading at a discount relative to industry benchmarks and with a strong Value Score, ZUMZ offers an attractive opportunity for investors seeking both stability and growth potential. The company currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks are Boot Barn Holdings, Inc. BOOT, Abercrombie & Fitch Co. ANF and Steven Madden, Ltd. SHOO.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.7% and 11.6%, respectively, from the fiscal 2024 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
Zacks Investment Research
Steven Madden, Ltd. SHOO is currently trading at a notably low price-to-earnings (P/E) multiple, which is below the Zacks Shoes and Retail Apparel industry and broader Consumer Discretionary averages. SHOO's forward 12-month P/E ratio is 16.20, lower than the industry average of 21.78 and the sector average of 17.27.
The stock is undervalued compared with its industry peers, thereby offering compelling value to investors looking for exposure to the retail apparel sector. Furthermore, SHOO's Value Score of A underscores its appeal as a potential investment.
SHOO gained 45.6% against the industry’s sharp 15.4% decline in the past year. The company’s strategic approach, along with its market expansion and product diversification endeavors, has helped it outperform the broader sector and the S&P 500 index, which grew 8.5% and 25.7%, respectively, during the same period. Closing at $45.76 on Monday, Steven Madden’s stock is currently trading 3% below its 52-week high of $47.24, attained on July 31, 2024.
Moreover, technical indicators are supportive of Steven Madden’s strong performance. The stock is trading above both its 50-day and 200-day moving averages, thus indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.
SHOO's Strategic Growth Driven by Diversification, Expansion
Steven Madden has successfully implemented a strategic approach to drive growth across multiple segments, with a strong emphasis on its direct-to-consumer (DTC) business and international markets. The company's expansion beyond footwear into categories such as handbags and apparel, along with investments in digital capabilities, resulted in substantial revenue gains across these segments during the second quarter. The acquisition of Almost Famous has further strengthened Steven Madden's apparel offerings, contributing to the its robust growth trajectory.
The wholesale segment delivered strong results, with revenues increasing 22.5% year over year to $385.3 million in the second quarter. Notably, wholesale accessories and apparel revenues surged 86%, showcasing the company’s successful diversification beyond its core footwear segment. Excluding the Almost Famous acquisition, wholesale revenues grew 8.2% while accessories and apparel revenues rose 29.8%.
The DTC segment also displayed resilience, with revenues increasing 6.4% year over year to $136.4 million. Comparable DTC sales grew 4.1%, driven by strong product assortments and effective inventory management, which minimized the need for promotional discounts.
In addition to product diversification, Steven Madden has been aggressively expanding its international presence, identifying it as a key long-term growth driver. International revenues grew 13% year over year in the second quarter, with the EMEA region emerging as a standout performer. The company expects EMEA revenues to grow more than 20% in 2024.
Steven Madden's Financial Strength and Promising Outlook
Steven Madden's second-quarter financials highlight its strong fiscal health and prudent capital management. As of June 30, 2024, the company held $180.5 million in cash and cash equivalents, along with $11.8 million in short-term investments, demonstrating a solid liquidity position. Notably, it had no outstanding debt, reflecting its careful financial stewardship.
The repurchase of $38.2 million in common stock, including shares acquired through employee stock award settlements, underscores the company’s confidence in its valuation and its commitment to returning value to shareholders. Additionally, the approval of a 21-cent quarterly dividend, payable on Sept. 23, 2024, to shareholders of record as of Sept. 13, further reinforces its strong financial footing and shareholder-friendly policies.
Looking ahead, Steven Madden is well-positioned to capitalize on growth opportunities in both domestic and international markets. The recovery in the U.S. wholesale footwear business is a positive sign of inventory normalization and improved relationships with key retail partners. The company expects 2024 revenues to increase in the band of 11-13% from 2023, with adjusted earnings per share (EPS) projected to be in the range of $2.55-$2.65 compared with $2.30 in 2023.
Conclusion
Investors should consider Steven Madden stock due to its strong financial position, strategic growth initiatives and attractive valuation. The company's focus on expanding its product offerings, particularly in apparel and accessories, coupled with its successful international expansion, positions it well for continued growth.
In addition, SHOO's strong liquidity, debt-free balance sheet and commitment to returning value to shareholders through stock buybacks and dividends further enhance its appeal. With a Zacks Rank #2 (Buy), the stock is well-positioned for long-term growth and value creation, making it an attractive investment opportunity.
Other Key Picks
Other top-ranked stocks are Boot Barn Holdings, Inc. BOOT, Abercrombie & Fitch Co. ANF and Deckers Outdoor Corporation DECK.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.7% and 11.6%, respectively, from the fiscal 2024 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 8.4% and 11.5%, respectively, from the year-ago actuals. DECK has a trailing four-quarter average earnings surprise of 47.2%.
Zacks Investment Research
For Immediate Release
Chicago, IL – September 17, 2024 – Stocks in this week’s article are TransMedics Group TMDX, Iamgold IAG, Graham GHM and GIII Apparel Group GIII.
4 Stocks Backed by High Efficiency for Solid Gains Amid Volatility
Efficiency level measures a company’s capability to transform available input into output and is often considered an important parameter for gauging its potential to make profits. A company with a high efficiency level is expected to provide stellar returns as it is believed to be positively correlated with price performance.
However, at times, it becomes difficult to measure the efficiency level of a company. This is why one must consider the popular efficiency ratios listed below while selecting stocks.
To that end, TransMedics Group, Iamgold, Graham and GIII Apparel Group made it through the screening process:
These efficiency ratios are:
Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the “accounts receivable turnover ratio” or “debtor’s turnover ratio” is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers.
Asset Utilization: This ratio indicates a company’s capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient.
Inventory Turnover: The ratio of the 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company’s ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which has resulted in excess inventory.
Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company’s ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
The use of these few criteria narrowed down the universe of over 7,906 stocks to 13.
Here are the top four stocks that made it through the screen:
TransMedics Group
TransMedics Group is a commercial-stage medical technology company. TMDX has an average four-quarter earnings surprise of 287.5%.
Iamgold
Iamgold is an international gold exploration and mining company based in Canada. IAG has an average four-quarter earnings surprise of 200%.
Graham
Graham designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. GHM has an average four-quarter earnings surprise of nearly 133.3%.
GIII Apparel Group
GIII Apparel Group is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. GIII has an average four-quarter earnings surprise of 118.2%.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2336294/4-stocks-backed-by-high-efficiency-for-solid-gains-amid-volatility
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