Strength Seen in Lands' End (LE): Can Its 16.6% Jump Turn into More Strength?

Zacks Equity Research
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Lands' End (LE) shares soared 16.6% in the last trading session to close at $43.05. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 12.2% gain over the past four weeks.

Shares of Lands' End have been gaining following the company’s upbeat second-quarter as well as fiscal 2021 outlook. Top-line momentum is being driven by sturdy global e-commerce wing and earlier-than-anticipated recovery in the Outfitters business. Prudent promotional strategies and enhanced data analytics capabilities are also an upside. For second-quarter fiscal 2021, the company expects net revenues in the range of $380-$385 million, which suggests growth of 21.8-23.4% from revenues of $312 million reported in the year-ago quarter. The top-line view indicates an increase from the prior guidance of $345-$355 million. The company projects earnings in the bracket of $0.39-$0.43 per share, significantly up from the prior projection of $0.05-$0.12 cents.

For fiscal 2021, management expects net revenues in the bracket of $1.67-$1.71 billion compared with the prior expectation of $1.61-$1.65 billion. The revised top-line view indicates growth of 17-19.8% from revenues of $1.43 billion reported in the prior year.  The company expects fiscal 2021 earnings to be between $1.27 and $1.47 per share compared with previous projection of $0.84 and $1.04.

This clothing maker is expected to post quarterly earnings of $0.10 per share in its upcoming report, which represents a year-over-year change of -23.1%. Revenues are expected to be $352.3 million, up 12.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Lands' End, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on LE going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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