An Abercrombie & Fitch Co. (ANF) Insider Bought 10,000 Shares

American Eagle reported a decline in revenue, and while it was profitable for its Q1 there was a significant decline in net income. We’d note that its dividend yield of 2.7% is high for the industry. Results were much better at Gap, with higher sales and a more than 40% increase in earnings over the last year (though analysts expect low growth from this point forward, and revenue growth was not particularly strong).

We can also compare the company to Aeropostale Inc (NYSE:ARO) and Guess?, Inc. (NYSE:GES). These businesses both saw declining sales in their most recent quarter compared to the same period in the previous fiscal year, and each of them is a somewhat popular short target with about 15% of the float held short. Aeropostale’s net income has been quite low on a trailing basis, and even with the sell-side expecting it to improve going forward it is valued at a premium to its peers at a forward P/E of over 20. So we don’t think it is a good buy right now. At a trailing earnings multiple of 17 Guess is priced in line with the three retailers we’d discussed previously, though at least in its last quarterly report financial performance was weak with a more than 60% fall in earnings compared to a year ago.

We’d hesitate to buy most of these companies at current prices until their performance improves. Gap is worth a look, we think, though Wall Street analysts are skeptical of continued growth at the company. Abercrombie & Fitch Co. (NYSE:ANF) has been improving its margins, we suppose, but to see operating losses even in a weak quarter is not good news and we also aren’t confident that the decline in same-store sales will be reversed quickly. As a result we would avoid it at least for now.

Disclosure: I own no shares of any stocks mentioned in this article.