David,
I looked at the Yahoo posts referenced by you. Both
bull and bear analysis is very amateur, but I won't say
mine is any better. ;-)
Regarding bull case:
you can't do 10 year discounting on a cyclical fashion
driven business. Especially with twenty tweaked
variables. I know one spreadsheet that croaks over
if you input current ANF ROE, market cap and
shareholder's equity (nudge, nudge Mike :-)))).
It's telling that at this ROE, the annualized rate
of return will be more than 40%. Forget about it - it's
a starry eyed scenario. For much better
bull case look at Mike's writeup at valuestocks.net
Regarding bear case: Stock making new lows is not
bearish. I cannot comment on management, though
James Clarke here mentioned that they are trustworthy.
Slipping same store sales and inventory buildup
is bad, but is it bad enough? There was quite
reasonable Fool writeup recently.
Now we come to the crux of the matter: fashion.
Are they have beens? Difficult to tell. It has
happened both ways. Look at Gap. In 1995-6, I was
looking at them. Everybody was saying that there is
no growth, that they are losing it, etc. They have
survived and flourished. But then, some other
stores were not so lucky. One more thing about
Gap: compare their recent report to ANF's. I may be
wrong, but I don't see where ANF is worse. So I think
that ANFs stock is down too much.
If I was an ANF bull, I would watch two things:
SSS and inventory. Plus the breakdown of their
successes/losses. Only close your eyes and wait for
September/October. June and July won't give any
clear indications. From what I see right now, they
have consistent trouble with women's line.
However, the men's line and kids stores are
very successful. If you have access, read sell-side
analyst reports. They are better than 99% of the
Yahoo drivel. This is retail, not .com and the
analysts are pretty knowledgeable. Forget their
ratings though.
If I was patient, I would also buy
it in July-August, before the back-to-school season
and 4th quarter. Most likely the stock won't recover
before then, though there may be some trading
opportunities.
Good luck
Jurgis |
