After experiencing a slight slowdown in the past six months, Abercrombie & Fitch Company ANF shares have recently bounced back, recording growth of 11.4% in the past month.

Following the recent rebound, the New Albany, OH-based company has outperformed its industry peers, the broader sector and the S&P 500 Index. Abercrombie’s 11.4% growth has outperformed the retail apparel and shoes industry's 3.2% rise in the past month. It also shows an outperformance compared with the broader Zacks Retail-Wholesale sector and the S&P 500's respective declines of 3.8% and 1.4% in the same period.

ANF Stock One-Month Price Performance

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Abercrombie’s performance is notably stronger than that of its close competitor, American Eagle Outfitters Inc. AEO, which posted a 2.7% decline in a month. ANF also surpassed other industry peers, including The Gap Inc.’s GAP 5.3% decline and Deckers Outdoor’s DECK 3.4% growth.

At the current price of $156.22, the Abercrombie stock reflects a 20.7% discount from its 52-week high mark. This indicates that the stock has upside potential.

ANF trades above its 50 and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Abercrombie’s financial health and prospects.

Abercrombie Stock Trades Above 50 & 200-Day Moving Averages

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What’s Behind ANF’s Recent Rally?

The recent rebound in Abercrombie’s shares is attributed to its strong third-quarter fiscal 2024 results announced on Nov. 26, 2024, and a raised fiscal 2024 outlook. The company’s strong performance in the third quarter of fiscal 2024 was fueled by substantial growth across regions and brands, especially in the Americas and the Abercrombie brand. Its earnings were supported by robust revenue growth and enhanced gross and operating margins.

On the last reported quarter’s earnings call, Abercrombie stated that it was optimistic about the holiday season, citing strong early demand for its holiday collections. Consequently, it expects fourth-quarter fiscal 2024 net sales to grow 5-7% year over year. Backed by fiscal fourth-quarter expectations and holiday season momentum, ANF has raised its fiscal 2024 sales forecast to a 14-15% year-over-year increase.

Abercrombie on Success Path: Factors Defining Growth

Abercrombie has been poised for long-term growth, bolstered by a strong brand performance and a commitment to offering high-quality, trend-forward assortments catering to a diverse customer base across regions and brands. Its focus on product quality and innovation has been a driving force behind its success.

The company continues to invest in store upgrades, digital initiatives and technology, strengthening its competitive position. Abercrombie has boosted store traffic by leveraging favorable fashion trends and executing robust strategies like store optimization.

ANF has modernized its retail spaces through store optimization efforts, creating inviting environments that encourage exploration. Investments in seamless e-commerce platforms enhance customer experience with personalized recommendations, easy navigation and hassle-free returns. The shift from large flagship stores to smaller, omni-channel-enabled locations reflects its adaptive strategy.

Abercrombie’s strategic transformation underscores its readiness for sustainable and profitable growth. By staying innovative and responsive to market trends, the company is well-positioned to maintain momentum and deliver long-term value to shareholders.

ANF’s Upward Earnings Estimate Trajectory

For fiscal 2024, the Zacks Consensus Estimate for Abercrombie’s sales and EPS implies 15% and 69.3% year-over-year growth, respectively. The consensus mark for fiscal 2025 sales and earnings indicates 5.8% and 5.5% year-over-year growth, respectively.

The Zacks Consensus Estimate for ANF’s fiscal 2024 and 2025 earnings per share rose 1% and 2.7%, respectively, in the last 30 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

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Undervalued Stock: Is it a Good Time to Buy Abercrombie?

From a valuation perspective, ANF shares present an attractive opportunity, trading at a discount than historical and industry benchmarks. The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 13.97X, reflecting a discount to the broader industry’s 19.21X multiple and its three-year high of 121.44X. It stands below the S&P 500’s average of 22.23X.

Trading much below its three-year high and industry peers, the company’s current valuation appears more affordable and appealing, presenting an opportunity to accumulate shares. The stock’s current Value Score of B validates its appeal.

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How to Play ANF Stock?

Abercrombie's strong fundamentals underscore its financial stability and operational effectiveness. Transformation initiatives, including rebranding, digital growth and store modernization, have positioned it for sustained long-term success, making the ANF stock a compelling investment choice.

Despite the recent surge in its share price, this profitable apparel retailer remains a bargain due to its relatively low valuation compared with peers. Abercrombie currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

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