Abercrombie & Fitch (ANF:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Abercrombie & Fitch(ANF:NYS)

Consumer Cyclical:Apparel Stores

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$19.76 (USD) 17/01/2019

Weighted Valuation
$23.38 (USD)

Overall Rating
Undervalued by 18.3%

Valuation Models Analyst Consensus: $24.00 (USD)
(in order of importance) Comparables: $24.49 (USD)
Adjusted Book Value: $19.33 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (ANF:NYS USD)

Price 19.76
Range 19.30 – 20.03
52 week 15.84 – 29.26
Open 19.32
Vol / Avg. 1.68M/2.41M
Mkt cap 1.3B
P/E 30.84
Div/yield 0.80/0.05
EPS 0.10
Shares 65.85M
Beta 0.49

Company Description

Abercrombie & Fitch is a specialty retailer that sells casual clothing, personal-care products, and accessories for men, women, and children. It sells direct to consumer through its stores and websites, which include the Abercrombie & Fitch, Abercrombie kids, and Hollister brands. Most stores are in the United States, but the company does have many stores in Canada, Europe, and Asia. All stores are leased. Abercrombie ships to well over 100 countries via its websites. The company sources its merchandise from dozens of vendors that are primarily located in Asia and Central America. Abercrombie has two distribution centers in Ohio to support its North American operations. It uses third-party distributors for sales in Europe and Asia.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ANF:NYS

Using a discounted cash flow model we generated an intrinsic value of $46.29 (USD) for ANF:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ANF:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $46.29 1% 5% 1% 5%
WACC (or Ke) 6.48 $59.61 $37.43
Terminal Growth Rate 1.50 $38.14 $58.53
Tax Rate 0.25 $50.86 $41.72
Cash Flow 373,554,656 $42.24 $50.33
Capital Expenditures -75,126,800 $45.52 $47.06
Long Term Debt 337,128,000 $46.54 $46.03

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $24.49 (USD) for ANF:NYS. We also generated a valuation of $46.01 (USD) using other metrics and comparables.
The comparable companies were American Eagle Outfitters (AEO:NYS), DSW (DSW:NYS), Guess? (GES:NYS), Children’s Place (PLCE:NAS) and Urban Outfitters (URBN:NAS).

Company ANF:NYS End Date Value
Earnings/Share $0.75 (USD)
Book Value/Share $17.08 (USD)
Sales/Share $52.59 (USD)
Cash Flow/Share $4.81 (USD)
EBITDA/Share $3.95 (USD)
Price Based on Comps Adjustment Factor (%)
$19.40 (USD) 0.0
$46.09 (USD) -56.6
$40.87 (USD) -41.8
$42.10 (USD) -31.6
$31.87 (USD) 0.0
ANF:NYS Ratios Used Average Values AEO:NYS DSW:NYS GES:NYS PLCE:NAS URBN:NAS
26.73 PE Ratio 25.87 12.39 54.89 0.00 19.09 17.11
1.17 PB Ratio 2.70 2.63 2.11 2.06 4.25 2.45
0.38 PS Ratio 0.78 0.86 0.66 0.65 0.78 0.93
4.17 PCF Ratio 9.66 7.68 10.07 12.29 9.24 9.04
3.29 EV to EBITDA 8.06 5.80 8.34 13.44 6.45 6.28

Multiples

Using a multiples approach we generated a valuation of  $24.87 (USD) for ANF:NYS

Company ANF:NYS End Date Value
Earnings/Share $0.75 (USD)
Book Value/Share $17.08 (USD)
Sales/Share $52.59 (USD)
Cash Flow/Share $4.81 (USD)
EBITDA/Share $3.95 (USD)
Price Based on Comps Adjustment Factor
$41.21 (USD) 0
$19.43 (USD) 0
$21.75 (USD) 0
$23.73 (USD) 0
$18.22 (USD) 0
Ratios Ratio Average
PE Ratio 54.95
PB Ratio 1.14
PS Ratio 0.41
PCF Ratio 4.94
EV to EBITDA 4.61

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ANF:NYS for the last 10 years was  1.17

We ran the Adjusted Book Value for  ANF:NYS and generated a book value of  $16.49 (USD)
By multiplying these we get an adjusted valuation of  $19.33 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for ANF:NYS. The 1 analysts have a concensus valuation for ANF:NYS for 2020 of $24.00 (USD).

ANF:NYS Abercrombie & Fitch

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 1 1 3.0000 Hold 2019-1-16

Current Price: 19.76 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 0.95 1.07
# EPS Analysts 1 1
Mean Revenue
# Revenue Analysts
Mean Target Price 24.00
Mean Cash Flow
Mean EBITDA 313.00
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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