Abercrombie & Fitch Co. (ANF): what the price assumes
In the published model solve dated 2026-Q2, anchored at $150.01, Abercrombie & Fitch Co. (ANF) is priced for -2.6% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.
Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/ANF
Headline
| Field | Value |
|---|---|
| Ticker | ANF |
| Company | Abercrombie & Fitch Co. |
| Sector / Industry | Consumer Cyclical |
| Current price | $150.01/sh |
| Composition | Abercrombie 48% / Hollister 52% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 2.1% |
| Operating margin today | 13.7% |
| Margin compression (value-band) | -11.6pp |
| Implied growth | -2.6% |
| Multiple paid | 10x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 9.9% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: n/a
| Reference | Value |
|---|---|
| vs own history | -0.23σ |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.10x | 5 | expensive |
| Earnings | 1.20x | 5 | expensive |
| Relative | 0.79x | 5 | justifies |
| Growth | 0.84x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $296.23 | 0.51x | yes | FCF base $0.6B, growth 5% (input: historical growth), terminal g 4.0%, WACC 8.3%, 6yr projection |
| DCF Exit Multiple | Growth | $177.79 | 0.84x | yes | Exit EV/EBITDA: 5.8x / 7.8x / 9.8x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $272.31 | 0.55x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.7x / 20.0x / 23.3x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $136.55 | 1.10x | yes | BV/sh $31.92, ROE (TTM) 39.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $312.81 | 0.48x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $113.03 | 1.33x | yes | Rev $5.3B, growth 5% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.2x / 1.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $139.20 | 1.08x | yes | EPS $11.60, growth 8% (input: historical EPS growth), PEG=1.51 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $89.27 | 1.68x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.52B × (1−29%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $215.94 | 0.69x | yes | BV $31.92 + 5yr PV of (ROE (TTM) 39.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $91.28 | 1.64x | yes | √(22.5 × EPS $11.60 × BVPS $31.92) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $280.41 | 0.53x | yes | EBITDA $0.90B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $128.77 | 1.16x | yes | FCF $566.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $118.77 | 1.26x | yes | SBC-adj FCF $0.53B (FCF $0.57B − SBC $0.04B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $236.05 | 0.64x | yes | EPS $11.60 × (8.5 + 2×7.9%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $34.42 | 4.36x | yes | BV $31.92 × (ROIC 8.9% / WACC 8.3%) |
| P/Sales Sector | Relative | $188.79 | 0.79x | yes | Revenue $5.34B × sector P/S 1.5x |
| PEG Fair Value | Relative | $137.29 | 1.09x | yes | EPS $11.60 × (PEG 1.5 × growth 7.9% (input: historical EPS growth)) → PE 11.8x |
| Earnings Yield | Earnings | $125.41 | 1.20x | yes | EPS $11.60 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $638.0m |
| Net debt / NOPAT (after-tax) | -1.22x (net cash) |
| Net debt / operating income (pre-tax) | -0.87x (net cash) |
| Share count CAGR (buyback) | -3.3% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Hollister is the larger of the two brands at 52% of revenue, and it went flat in the first quarter while Abercrombie grew 3%, so the bigger half of the company is the half that stalled.
- Tariffs are the one cost pressure that is already quantified: the FY2026 10-K expects roughly $40 million of incremental impact in Fiscal 2026, about 70 basis points of net sales, after planned mitigation.
- Management held its full-year outlook at 3% to 5% sales growth alongside about $450 million of planned repurchases, a sum worth more than a tenth of the company's market value.
Bull Case
Fourteen consecutive quarters of sales growth is the fact that should frame everything else here. Fiscal 2025 closed with net sales up 6%, and the 10-K is specific about the composition, attributing the increase to "low-single-digit AUR growth and mid-single-digit unit volume growth" across owned stores and digital channels. That pairing is the one that matters. More units at higher average prices is the opposite of a retailer renting its comparable sales from the markdown rack.
What came out the other end is not a typical mall margin. On a trailing basis 11.7% of revenue reaches operating income. American Eagle Outfitters (AEO) manages 6.0% on a similar revenue base, Urban Outfitters (URBN) 9.8%, and Gap (GAP) 8.4%, each on its own filed figures. The operators that do better are specialty formats a fraction of the size: Buckle (BKE) at 21.1% and Boot Barn (BOOT) at 13.3%. Among broad-line teen and young-adult apparel sellers at this revenue scale, Abercrombie is running the most profitable operation.
Two brands aimed at different ages give the company two chances at the same year, which is more than most of its peer group has. Hollister carries 52% of revenue and Abercrombie the remaining 48%, and the 10-K describes each as a family of lines rather than a single logo, with Gilly Hicks sitting inside the Hollister group. When one customer cohort loses interest, the other is not automatically lost with it.
The capital structure was quietly rebuilt. The senior secured notes are gone, retired rather than rolled, and what remains is an asset-based revolving facility that the 10-K reports was in compliance with all covenants as of January 31, 2026. On a funded-debt basis there are no borrowings and $619.2 million of net cash. A specialty apparel retailer with no lender to answer to has choices in a poor season that a levered competitor does not, and in this industry poor seasons are scheduled rather than surprising.
The last piece is the arithmetic of shrinking. The share count has come down about 3.2% a year across four years, and management has pointed to roughly $450 million of repurchases for the current fiscal year. Set against a $4.3 billion market value, that is more than a tenth of the company retired inside twelve months. Retire a tenth annually at a single-digit multiple of operating income and the per-share numbers improve without a single new store opening.
Bear Case
The market is not arguing with the earnings. It is arguing with their shelf life. Teenage and young-adult taste is the least durable asset in retail, and in the financial statements a brand at the top of its cycle looks identical to a brand about to roll over: same margin, same growth, same confident language. The statements cannot tell those two apart. A single-digit multiple on rising profits is how the market says it knows that.
The evidence is already turning up. Hollister, the larger of the two brands at 52% of revenue, was flat in the first quarter while Abercrombie grew 3%, and EMEA sales fell 10%. Full-year guidance sits at 3% to 5% sales growth against the 6% delivered in the prior fiscal year. None of that is a collapse. All of it points the same way.
Cost pressure is quantified and it is not trivial. The FY2026 10-K expects approximately $40 million of incremental tariff impact in Fiscal 2026 compared with Fiscal 2025, roughly 70 basis points of net sales after planned mitigation, and it states that tariff changes already reduced Fiscal 2025 operating profit. Measured against an 11.7% trailing operating margin, 70 basis points is about one dollar in sixteen of operating profit, gone before a single customer changes their mind about a hoodie.
Two structural details deserve more attention than they usually get. The first is earnings quality: Fiscal 2025 operating income includes a settlement the company received as a plaintiff in payment card interchange fee litigation, an item its own reconciliation strips out of the adjusted figures. A trailing profit number flattered by a legal windfall is a weaker base than it looks. The second is the balance sheet, which is debt free only on the funded-debt measure. Capitalize the store leases, which carry a 5.5-year weighted-average remaining term at a 6.9% discount rate per the 10-K, and the net cash position inverts into a net obligation. Mall rent is a fixed cost wearing an operating cost's clothing, and it does not renegotiate quickly when traffic falls.
So the bear case is not that the stock is expensive. It plainly is not. It is that roughly nine times operating income is what the market pays when it doubts the operating income is the base rather than the peak. If margins drift back toward where the broad mall apparel group runs, nearer the 6.0% AEO posts or the 8.4% at Gap, the multiple stops looking like a bargain and starts looking like an accurate forecast.
Valuation
Roughly nine times operating income is what a buyer pays here, and the arithmetic underneath runs in an unfamiliar direction. At $93.74 the price is low enough to remain defensible even if operating profit shrank at a mid-single-digit annual pace from here. Nothing in it asks this business to grow. What it embeds, at the margin, is the assumption that it will not.
The methods used to triangulate all land at or above today's price. Asset value, earnings power, peer multiples and the cash-flow projections point the same way, which is the pattern that appears when the disagreement is not about the valuation but about the earnings feeding it. Peer multiples sit furthest above, which is another way of stating the obvious: the market applies a materially lower multiple to this company than to the sector it belongs to.
The concrete requirement therefore runs backwards from the usual case. Trailing operating margin is 11.7%, and the price needs no improvement on that figure; it would survive a good deal of erosion. What it does need is for any erosion to be gradual rather than a step change, because a single-digit multiple applied to a margin that halves is not a single-digit multiple on the new number. That is the whole question, and it is a question about brand heat, not about arithmetic.
Cohort position gives the mean-reversion argument somewhere to land. On operating margin the company sits above AEO at 6.0%, Gap at 8.4% and URBN at 9.8%, and below BOOT at 13.3% and Lululemon (LULU) at 18.3%. Middle-upper of the range rather than the top, which is worth knowing: the gap between where Abercrombie earns today and where the broad-line peers earn is the size of the fall the market appears to be pricing. On its own forecasts, management has raised guidance fifteen times and reaffirmed it nine times since 2006, withdrawing it once.
The balance sheet is what buys the time to find out. No borrowings outstanding, $619.2 million of net cash on the funded-debt basis, and a revolving facility in covenant compliance at the January year-end. Read it with the store leases capitalized and the picture tightens, because rent with 5.5 years of weighted-average term left is a claim that does not go away when traffic does. Both readings are true, and together they describe a company with no lender to satisfy and a landlord it cannot quickly leave.
Catalysts
The first quarter of fiscal 2026, reported May 27, 2026, was a record for the period: net sales of about $1.1 billion, up 2% on the year, an operating margin of 8.0%, and diluted earnings per share of $1.47. The regional split is where the information sits. The Americas rose 3% and Asia-Pacific rose 24%, while EMEA fell 10%, with softness in that region tied to the Middle East conflict and concentrated in Hollister.
Management held rather than raised the annual outlook, guiding to full-year fiscal 2026 net sales growth of 3% to 5%, full-year fiscal 2026 net income per diluted share of $10.20 to $11.00, and roughly $450 million of share repurchases. For the second quarter it guided to net sales growth of 2% to 4%, second-quarter net income per diluted share of $1.80 to $2.00, and at least $150 million of repurchases. Holding an outlook rather than raising it, after fourteen straight quarters of growth, is itself a signal about how management reads the back half.
The tariff schedule is the dated item worth marking. The FY2026 10-K describes rates expected to apply from February 24, 2026 and to remain in place for the whole of Fiscal 2026, producing approximately $40 million of incremental impact after mitigation. That cost lands across the year rather than in one quarter, which means the margin comparison gets harder as the year progresses rather than easier, and the second-half prints are where it will be visible.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- AEO (American Eagle Outfitters, Inc.)
- FY2025 10-K: …of climate change, the availability of import quotas, transportation disruptions and foreign currency exchange rate fluctuations, could adversely affect our business and cause our results of operations to fluctuate. We operate in a highly competitive industry, and we face significant pricing pressures from existing…
- FY2025 10-K: …a sufficient number of qualified senior managers and other key personnel. We must also attract, develop, and retain a sufficient number of qualified field and distribution center personnel. Competition for talent is intense and the turnover rate in the retail industry is generally high, and we cannot be sure that we…
- URBN (Urban Outfitters, Inc.)
- FY2025 10-K: …in highly competitive domestic and international markets. Our Retail segment competes on the basis of, among other things, the location of our stores, website, mobile application and catalog presentation, website and mobile application design and functionality, the breadth, quality, style, price and availability of…
- FY2025 10-K: …Our Retail segment utilizes point-of-sale register systems connected by a secure data network to our home offices. Additionally, our stores have mobile point-of-sale devices that have virtually the same functionality as our cash registers. These systems provide for register efficiencies, timely customer checkout and…
- GAP (GAP, INC)
- FY2025 10-K: …preferences and practices, including the increasing shift to digital brand engagement, social media communication, and digital shopping; • developing innovative, high-quality products in sizes, colors, and styles that appeal to customers of varying demographics and tastes; • purchasing and stocking merchandise to…
- FY2025 10-K: …transactions and demand for our merchandise are influenced by our marketing efforts. We use various marketing channels to drive customer awareness and consideration of and interest in shopping our brands with the aim of increasing sales, and we are increasingly using digital advertising to drive sales and traffic to…
- BKE (BUCKLE, INC)
- FY2025 10-K: …industries are highly competitive with fashion, selection, quality, price, location, store environment, and service being the principal competitive factors. While the Company believes it is able to compete favorably with other merchandisers, including department stores and specialty retailers, with respect to each of…
- FY2025 10-K: …retail industry is highly competitive. The Company competes primarily on the basis of fashion, selection, quality, price, location, service, and store environment. The Company faces a variety of competitive challenges, including: • Anticipating and responding timely to changing customer demands and preferences; •…
- BOOT (BOOT BARN HOLDINGS, INC.)
- FY2025 10-K: …in our industry, and we may be unable to compete effectively. The retail industry for western and work wear is highly fragmented and characterized by primarily regional competitors. We estimate that there are thousands of independent specialty stores scattered across the country. We believe that we compete primarily…
- FY2025 10-K: …new stores. As a percentage of net sales, gross profit rate increased by 70 basis points driven primarily by a 130 basis-point increase in merchandise margin rate partially offset by 60 basis points of deleverage in buying, occupancy and distribution center costs. The increase in merchandise margin rate was primarily…
- ROST (Ross Stores, Inc.)
- FY2025 10-K: …for our associates and their dependents. Competition We believe the principal competitive factors in the off-price retail apparel and home fashion industry are offering significant discounts on brand name merchandise, offering a well-balanced assortment that appeals to our target customers, and consistently providing…
- FY2025 10-K: …and market share. 10 Competitive pressures in the apparel and home-related merchandise retailing industry are high. The retail industry is highly competitive and the marketplace is fragmented, as many different retailers compete for market share by utilizing a variety of store and online formats and merchandising…
- LULU (lululemon athletica inc.)
- FY2025 10-K: …our technical product innovation. We also believe our ability to introduce new product innovations, combine function and fashion, and connect through in-store, online, and community experiences sets us apart from our competition. In addition, we believe our vertical retail distribution strategy and community-based…
- FY2025 10-K: …athletic apparel, including large, diversified apparel companies with substantial market share, and established companies expanding their production and marketing of technical athletic apparel, as well as against smaller retailers and those specifically focused on women's athletic apparel. We also face competition…
- LEVI (LEVI STRAUSS & CO)
- FY2025 10-K: …supply chain. Logistics . During fiscal year 2024 and as part of Project Fuel, the Company changed its distribution strategy from an owned and operated model to a mix of owned and third-party operated distribution centers used to warehouse and ship products to our wholesale customers, retail stores and e-commerce…
- FY2025 10-K: …or non-compliance can raise reputational challenges with our consumers and other stakeholders for various reasons, including the inability to sufficiently verify the origins for the material used in the products we sell. The global apparel industry is subject to intense competition and cost and pricing pressure. The…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
ANF first quarter fiscal 2026 results, May 27, 2026