Is ANF Trading At A Bargain?

Here is why we think Abercrombie & Fitch (ANF) deserves consideration as a value stock.

• Reasonable Revenue Growth: 12.5% LTM and 10.6% last 3 year average.
• Cash Generative: Nearly 8.3% free cash flow margin and 14.2% operating margin LTM.
• No Major Shocks: ANF has avoided any large revenue collapses in the last 3 years.
• Modest Valuation: Despite encouraging fundamentals, ANF trades at a PE multiple of 8.5
• Opportunity vs S&P: Compared to S&P, you get lower valuation, higher revenue growth, but lower margins

As a quick background, Abercrombie & Fitch operates as a specialty retailer offering apparel through Hollister and A&Fitch segments, with approximately 729 stores across Europe, Asia, Canada, the Middle East, the US, and internationally.

*LTM: Last Twelve Months

But do these numbers tell the full story? Read Buy or Sell ANF Stock to see if Abercrombie & Fitch still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

Stocks Like These Can Outperform. Here Is Data

For 65 similar value stocks chosen as of mid 2024, consider the following stats for the subsequent 1 year period.

• Average peak return of 39.3% vs 14.4% for S&P, with maximum peak return of 133%
• Win rate of 60%; win rate represents % of stocks with positive return
• Average 1-year return of 14.6%, similar to S&P’s despite tariff instability

But Consider The Risk

That said, ANF isn’t immune to big drops. It plunged 83% in both the Dot-Com Bubble and the Global Financial Crisis. The inflation shock hit it hard too, with a nearly 70% fall. Even the smaller shocks, like 2018 and Covid, dragged it down by over 50%. Good fundamentals matter, but when the market turns, ANF shows it can still take a serious hit.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ANF Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.