Click to EnlargeEarnings Date: Aug. 21
YTD Return: 20%
Earlier this week, I noted that L Brands (LTD) is one of a handful of names in the retail sector that doesn’t get its second-largest chunk of sales from the current third quarter. Instead, the second quarter, which L Brands will report in two weeks, tends to be the next-best thing — in terms of both sales and unadjusted earnings — after the holiday season.
That’s good news considering analysts are now expecting a penny more than they were a few months back: a solid 54 cents, which also is toward the upper end of the range L Brands gave during its first-quarter call. Still, that only makes for 8% earnings growth — hardly head-turning.
LTD middled a bit after its most recent report, which boasted 14% earnings growth on strong revenue, before jumping around 19% in the past month of trading to set new all-time highs.
On the one hand, that kind of momentum could easily carry into the next earnings report, especially considering the company has beat earnings estimates the past four quarters, is expanding its PINK brand rapidly and is working to consolidate stores and improve productivity.
But considering L Brands is expected to grow earnings by about 10% annually over the next half-decade — and considering LTD is a little pricey at 16 times 2014 earnings — the company might have to show more than single-digit growth this quarter to keep investors excited.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.