On Thursday, Victoria's Secret (NYSE:VSCO) retained its Outperform rating and $26.00 stock price target from BMO Capital. The affirmation follows the company's recent financial report, which showed Sales and Earnings Per Share (EPS) at the top end of their updated range. This performance was partly attributed to a robust April.
The lingerie retailer's management has provided guidance for the second quarter, projecting sales to be in line with expectations, while EPS is anticipated to be higher, particularly at the high end. This outlook is based on a strong start to May and positive sentiments for the second quarter. Furthermore, the company has reiterated its full-year sales and EBIT forecasts.
Despite acknowledging the ongoing decline in revenue, BMO Capital's stance reflects a belief that Victoria's Secret's current earnings are below potential and that its stock is trading at a lower than deserved multiple. The company's financial resilience seems to be recognized, suggesting confidence in its ability to maintain performance amidst market challenges.
Victoria's Secret's financial results and forward-looking statements offer insight into the company's operational health and market position. The reiteration of the Outperform rating and price target by BMO Capital indicates a continued positive outlook for the company's stock performance in the foreseeable future.
In other recent news, Victoria's Secret & Co. delivered a strong performance in the first quarter with adjusted earnings per share (EPS) of $0.12, exceeding analyst estimates of $0.08. The company's revenue held steady at $1.36 billion, in line with consensus estimates and a 3% decrease from the same period last year. CEO Martin Waters (NYSE:WAT) attributed the quarter's results to effective inventory management and disciplined promotional strategies, which resonated with customers.
For Q2 2024, Victoria's Secret anticipates an adjusted EPS between $0.05 and $0.20, with the midpoint of the guidance range at $0.125, surpassing the analyst consensus of $0.08. The company also forecasts a slight decline in net sales compared to Q2 of the previous year's $1.427 billion. Adjusted operating income is projected to fall between $30 million and $45 million.
In addition to these developments, the company reaffirmed its full-year outlook for fiscal year 2024, expecting net sales to hover around $6.0 billion, marking a slight decline compared to the previous fiscal year.
Adjusted operating income for the year is predicted to range from $250 million to $275 million. Despite cautious optimism regarding the broader retail environment in North America, the company remains confident in its global brand strength and long-term financial growth potential.
InvestingPro Insights
Victoria's Secret's recent financial performance and positive projections by BMO Capital are complemented by intriguing dynamics found in the InvestingPro platform. An InvestingPro Tip highlights that management has been aggressively buying back shares, a sign of confidence in the company's valuation and prospects.
Moreover, the company has a high shareholder yield, which can be attractive to investors seeking companies with a strong return on their investment. Share buybacks and shareholder yield are both elements that can influence an investor's decision, especially when considering the company's ability to generate value.
From a data perspective, Victoria's Secret has a market capitalization of $1.77 billion and trades at a P/E ratio of 16.9, which adjusts to 15.38 for the last twelve months as of Q4 2024. The company's stock has experienced a strong return over the last month, with a 25.68% price total return, reflecting investor optimism and potentially aligning with the positive outlook expressed by BMO Capital. The company's revenue for the last twelve months as of Q4 2024 stands at $6.182 billion, with a gross profit margin of 44.34%, underscoring its ability to maintain profitability.
For those interested in further insights and metrics, there are additional InvestingPro Tips available on the platform. These can be accessed at Investing.com/pro/VSCO, and readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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