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In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 5.3%. VSCO surpassed earnings estimates in three of the trailing four quarters and missed once, the average beat being 2.9%, as shown in the chart below.
Image Source: Zacks Investment Research
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
VSCO’s Q3 Estimate Revisions
The Zacks Consensus Estimate for the third-quarter adjusted loss per share has narrowed to 64 cents from 68 cents in the past 30 days. In the prior-year quarter, the company incurred an adjusted loss per share of 86 cents. For revenues, the consensus mark is pegged at $1.29 billion, suggesting 1.9% year-over-year growth.
What the Zacks Model Unveils for VSCO
Our proven model predicts an earnings beat for Victoria's Secret this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
VSCO’s Earnings ESP: Victoria's Secret currently has an Earnings ESP of +4.69%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank of Victoria's Secret: The company carries a Zacks Rank #3 at present.
Victoria's Secret’s third-quarter performance is likely to have been aided by sequential growth in North America’s sales for the fifth straight quarter, reflecting positive momentum in physical stores and digital channels. Strong customer response to the Victoria's Secret Dream bra collection and the Featherweight Max front-close sports bra are anticipated to have boosted the company’s top line.
VSCO is likely to have benefited from robust growth in the beauty segment, and strong performances in the sports bra segment and the PINK apparel category. The enhanced performance of the company’s customer loyalty program bodes well.
Increased discounting, especially in key categories such as beauty and panties, to drive traffic is likely to have put pressure on margins despite higher sales volumes. In its second-quarter 2024 conference call, Victoria's Secret said that Transportation rates, which acted as tailwinds earlier in the year, were beginning to increase, creating headwinds for the gross margin in the third quarter and beyond.
Price Performance & Valuation of VSCO
The VSCO stock has surged 65.8% over the past three months, significantly outperforming its industry peers and the broader market. The company has outperformed other industry players like American Eagle Outfitters’ (AEO - Free Report) 1.8% decline, Nordstrom’s 0.5% dip and Capri Holdings’ (CPRI - Free Report) 35% decrease, making the competition fierce.
Price Performance
Image Source: Zacks Investment Research
Let us assess the value VSCO offers to investors at its current levels.
Victoria's Secret is currently valued at a discount compared with its industry on a forward 12-month P/S basis. Its forward 12-month price-to-sales ratio stands at 0.5, lower than the industry and the S&P 500's 5.25.
P/S (F12M)
Image Source: Zacks Investment Research
Investment Thoughts for VSCO
Victoria’s Secret has shown encouraging signs of improvements, with sequential North America sales growth, and strong performances in key product categories like sports bras, PINK apparel, and beauty. Its customer loyalty program and digital initiatives have supported sales momentum.
However, despite these positives, rising transportation costs and increased discounting are likely to weigh on margins, whereas the broader retail environment remains competitive. However, new buys should be restricted until margin pressures and competitive dynamics stabilize, ensuring more favorable entry points.
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Victoria's Secret Set to Report Q3 Earnings: Buy, Sell or Hold Stock?
Victoria's Secret & Co. (VSCO - Free Report) is slated to release third-quarter 2024 results on Dec. 5, after the closing bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 5.3%. VSCO surpassed earnings estimates in three of the trailing four quarters and missed once, the average beat being 2.9%, as shown in the chart below.
Image Source: Zacks Investment Research
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
VSCO’s Q3 Estimate Revisions
The Zacks Consensus Estimate for the third-quarter adjusted loss per share has narrowed to 64 cents from 68 cents in the past 30 days. In the prior-year quarter, the company incurred an adjusted loss per share of 86 cents. For revenues, the consensus mark is pegged at $1.29 billion, suggesting 1.9% year-over-year growth.
What the Zacks Model Unveils for VSCO
Our proven model predicts an earnings beat for Victoria's Secret this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
VSCO’s Earnings ESP: Victoria's Secret currently has an Earnings ESP of +4.69%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank of Victoria's Secret: The company carries a Zacks Rank #3 at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Influencing VSCO’s Q3 Performance
Victoria's Secret’s third-quarter performance is likely to have been aided by sequential growth in North America’s sales for the fifth straight quarter, reflecting positive momentum in physical stores and digital channels. Strong customer response to the Victoria's Secret Dream bra collection and the Featherweight Max front-close sports bra are anticipated to have boosted the company’s top line.
VSCO is likely to have benefited from robust growth in the beauty segment, and strong performances in the sports bra segment and the PINK apparel category. The enhanced performance of the company’s customer loyalty program bodes well.
Increased discounting, especially in key categories such as beauty and panties, to drive traffic is likely to have put pressure on margins despite higher sales volumes. In its second-quarter 2024 conference call, Victoria's Secret said that Transportation rates, which acted as tailwinds earlier in the year, were beginning to increase, creating headwinds for the gross margin in the third quarter and beyond.
Price Performance & Valuation of VSCO
The VSCO stock has surged 65.8% over the past three months, significantly outperforming its industry peers and the broader market. The company has outperformed other industry players like American Eagle Outfitters’ (AEO - Free Report) 1.8% decline, Nordstrom’s 0.5% dip and Capri Holdings’ (CPRI - Free Report) 35% decrease, making the competition fierce.
Price Performance
Image Source: Zacks Investment Research
Let us assess the value VSCO offers to investors at its current levels.
Victoria's Secret is currently valued at a discount compared with its industry on a forward 12-month P/S basis. Its forward 12-month price-to-sales ratio stands at 0.5, lower than the industry and the S&P 500's 5.25.
P/S (F12M)
Image Source: Zacks Investment Research
Investment Thoughts for VSCO
Victoria’s Secret has shown encouraging signs of improvements, with sequential North America sales growth, and strong performances in key product categories like sports bras, PINK apparel, and beauty. Its customer loyalty program and digital initiatives have supported sales momentum.
However, despite these positives, rising transportation costs and increased discounting are likely to weigh on margins, whereas the broader retail environment remains competitive. However, new buys should be restricted until margin pressures and competitive dynamics stabilize, ensuring more favorable entry points.