ABERCROMBIE & FITCH CO-CL A (NYSE:ANF) – A Potentially Undervalued Retail Stock

ABERCROMBIE & FITCH CO-CL A (NYSE:ANF) was identified as a decent value stock by our screening process. The company shows strong profitability and financial health while trading at a relatively low valuation. Below, we examine why ANF may appeal to value investors.

Valuation

ANF appears attractively priced with a Price/Earnings (P/E) ratio of 6.83, well below both the industry average (51.78) and the S&P 500 (24.21). The stock also trades at a low Price/Forward Earnings ratio of 6.70, cheaper than 91.74% of its peers in the specialty retail sector. Additionally, its Enterprise Value to EBITDA and Price/Free Cash Flow ratios suggest the stock is undervalued compared to industry standards.

Financial Health

The company has no outstanding debt, which strengthens its balance sheet and reduces financial risk. Its Altman-Z score of 4.87 indicates low bankruptcy risk, outperforming 88.43% of industry peers. While liquidity ratios like the Current Ratio (1.48) and Quick Ratio (0.97) are mixed, ANF’s strong solvency and profitability mitigate concerns over short-term liquidity.

Profitability

ANF earns high marks for profitability, with a Return on Assets (17.16%) and Return on Equity (42.39%) ranking among the best in its sector. Margins are equally impressive—its Gross Margin (64.15%), Operating Margin (15.20%), and Profit Margin (11.44%) all outperform over 90% of competitors. These metrics suggest efficient operations and pricing power.

Growth

Recent growth has been strong, with Earnings Per Share (EPS) up 70.27% year-over-year and Revenue increasing by 15.60%. However, future EPS growth is expected to decline slightly (-3.71%), while Revenue is projected to grow modestly (2.42%). Despite slowing growth expectations, ANF’s current valuation may already account for this.

Our Decent Value screener lists more stocks with similar characteristics and is updated daily.
For a deeper look, review the full fundamental report on ANF.

Disclaimer

This is not investment advice. The observations here are based on available data at the time of writing. Always conduct your own research before making investment decisions.