Value
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.8 |
| P/S | 9.7 |
| EV/EBITDA | 7.8 |
| Fwd P/E | 9.4 |
| PEG | 9.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 9.2x
- ▸PEG: 0.66
- ▸Attractively valued
ANF · Why this verdict
Why Abercrombie & Fitch (ANF) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Abercrombie & Fitch combines an attractively priced forward multiple of 7.7x with a solid Piotroski score and three consecutive earnings beats, but the risk/reward at current prices is unfavorable, the stock is overbought near-term, and free cash flow covers only 57% of reported net income.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus estimates in three of the last four quarters, with an in-line result in the oldest quarter followed by three straight beats of 10%, 3%, and 16% in more recent periods. The average positive surprise of roughly 7% indicates estimates are being set conservatively. Earnings | EPS surprise stays positive for 2 more consecutive quarters, with the average beat remaining above 5%. | ↑Improving |
| CounterThe most recent result — a 15.7% beat — may reflect easy comparisons or one-time factors; with overall growth low and a weak revenue growth score, the earnings beat streak may soften as the comparison base normalizes. | ||
At a forward multiple of 7.7x and a PEG of 0.53, the shares screen inexpensively relative to peers and carry roughly 22% upside to analyst consensus price targets. The peer-relative value rank is in the attractive range, suggesting the market is pricing in limited growth expectations. Valuation breakdown | The stock closes the discount to consensus target, trading above $96 within 12 months. | →Stable |
| CounterLow multiples in apparel retail often reflect cyclical demand sensitivity and structural risks from changing consumer preferences; the cheap multiple may be warranted rather than an opportunity if revenue growth remains near zero. | ||
Free cash flow covers only 57% of reported net income, meaning a meaningful portion of reported earnings is not converting into cash. This gap between accounting profit and cash generation introduces uncertainty about the true earnings power of the business. Quality breakdown | Free cash flow rises to cover more than 80% of net income for 2 consecutive quarters. | →Stable |
| CounterA 57% FCF-to-net-income ratio, while below ideal, does not indicate negative free cash flow; the business is still generating real cash, and the gap may narrow as working capital normalizes. | ||
RSI is at 74, placing the stock in overbought territory in the near term. Combined with an unfavorable risk/reward ratio — where downside to stop loss exceeds upside to the price target — the current setup does not support new position establishment at these levels. Momentum breakdown | RSI cools below 60 and the upside-to-downside ratio improves above 1.5-to-1 before the thesis becomes actionable. | ↓Deteriorating |
| CounterMomentum is recovering from a death-cross setup with MACD improving and strong volume accumulation; overbought readings in a recovering trend can persist for several weeks before resolving, and a premature exit or non-entry misses the recovery leg. | ||
The company has beaten consensus estimates in three of the last four quarters, with an in-line result in the oldest quarter followed by three straight beats of 10%, 3%, and 16% in more recent periods. The average positive surprise of roughly 7% indicates estimates are being set conservatively.
↑ImprovingEarnings
- Expectation
- EPS surprise stays positive for 2 more consecutive quarters, with the average beat remaining above 5%.
CounterThe most recent result — a 15.7% beat — may reflect easy comparisons or one-time factors; with overall growth low and a weak revenue growth score, the earnings beat streak may soften as the comparison base normalizes.
At a forward multiple of 7.7x and a PEG of 0.53, the shares screen inexpensively relative to peers and carry roughly 22% upside to analyst consensus price targets. The peer-relative value rank is in the attractive range, suggesting the market is pricing in limited growth expectations.
→StableValuation breakdown
- Expectation
- The stock closes the discount to consensus target, trading above $96 within 12 months.
CounterLow multiples in apparel retail often reflect cyclical demand sensitivity and structural risks from changing consumer preferences; the cheap multiple may be warranted rather than an opportunity if revenue growth remains near zero.
Free cash flow covers only 57% of reported net income, meaning a meaningful portion of reported earnings is not converting into cash. This gap between accounting profit and cash generation introduces uncertainty about the true earnings power of the business.
→StableQuality breakdown
- Expectation
- Free cash flow rises to cover more than 80% of net income for 2 consecutive quarters.
CounterA 57% FCF-to-net-income ratio, while below ideal, does not indicate negative free cash flow; the business is still generating real cash, and the gap may narrow as working capital normalizes.
RSI is at 74, placing the stock in overbought territory in the near term. Combined with an unfavorable risk/reward ratio — where downside to stop loss exceeds upside to the price target — the current setup does not support new position establishment at these levels.
↓DeterioratingMomentum breakdown
- Expectation
- RSI cools below 60 and the upside-to-downside ratio improves above 1.5-to-1 before the thesis becomes actionable.
CounterMomentum is recovering from a death-cross setup with MACD improving and strong volume accumulation; overbought readings in a recovering trend can persist for several weeks before resolving, and a premature exit or non-entry misses the recovery leg.
Per-dimension breakdown
Quality
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 8.5 |
| Gross margin | 8.3 |
| Op margin | 3.2 |
| Net margin | 4.7 |
| Current ratio | 5.3 |
| FCF quality | 4.5 |
| Moat | 6.4 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 39%
- ▸Earnings quality warning: 57% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
3.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 4.8 |
Momentum
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 4.8 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.9 |
| Analyst rating | 7.0 |
| Price target | 5.5 |
- ▸LLM news sentiment: +0.38 (n=6)
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $2,100,000 (0.043% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.8 |
| quality rank | 7.5 |
| growth rank | 1.1 |
- ▸Superior ROE vs peers
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.5 |
| support resistance | 3.7 |
| 52w position | 6.4 |
Risk (lower is worse)
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.5 |
| days to cover | 7.1 |
| volatility | 0.9 |
| put call | 5.5 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 7.5 |
| debt equity | 5.3 |
- ▸High IV: 81%
- ▸Above max pain $60
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 11 days
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier +2 (HOLD_IF_HOLDING → STRONG_BUY_WAIT).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=+2|ENTRY_STICKY:WITHIN_BANDPassed (7)
- MOMENTUM:6.0>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.70
- NEWS_BOOST:ANALYST_CLUSTER(5)
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.7=NEGATIVE
Warning (1)
- EARNINGS_PROXIMITY:11d<=14d (soft)
Reward-to-Risk
-0.68
Upside
-10.2%
Downside
15.0%
Sizing output
STARTER
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeCatalyst-Driven — Earnings in 11d with 3/4 beat streak
SuitabilityAggressive — MCap $4.8B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:6.0>=5.5. Top dim: Value at 7.8; weakest: Growth at 3.8. No conviction either direction.
The strongest dimensions are Value at 7.8, Catalyst at 6.8, and Quality at 6.5; the weakest are Growth at 3.8, Risk (lower is worse) at 4.2, and Technical at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.68 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Valuation Peer Relative
Trip ifAnalyst consensus price target falls below $75, suggesting the market has materially lowered its view of fair value.
- P2Earnings Beat Streak With Inline Caveat
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3Free Cash Flow Quality Gap
Trip ifFree cash flow rises above 80% of net income for 2 consecutive quarters.
- P4Overbought Momentum Unfavorable Risk Reward
Trip ifRSI drops below 60 and the reward-to-risk ratio rises above 1.5-to-1.