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Stock Analyst Update

A Stitch in Time Saves Abercrombie

With evidence that a turnaround is under way, the stock looks cheap.

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Recently struggling retailer Abercrombie & Fitch (ANF) may finally be showing signs of life after almost a year of hard times. Although the company's turnaround is far from assured at this point, investors should think about picking up the shares while they're still more than 55% off their 52-week high.

The company announced Thursday that sales for the month of July rose 22%, driven by new-store openings and improved sales of its women's clothing lines. Comparable store sales, which are a better indicator of a company's overall health, declined 2% from last year. However, Abercrombie said it expects to beat analyst earnings estimates of $0.16 to $0.18 per share for the second quarter, ended in July, causing its stock price to jump more than 12% to $18 in midday trading. Results for the second quarter are due to be announced August 8 after the stock market closes.

Mark Sellers does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.