Investors might want to bet on Victoria's Secret (VSCO) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.The upward trend in estimate revisions for this retailer of lingerie, pajamas and beauty products reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical resear ...

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum if their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer strategy involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Victoria's Secret (VSCO) Analysis - Victoria's Secret (VSCO) has shown significant recent price momentum, with a four-week price change of 30.3%, indicating growing investor interest [4] - Over the past 12 weeks, VSCO's stock has gained 92.1%, demonstrating its ability to deliver positive returns over a longer timeframe [5] - VSCO has a high beta of 2.19, suggesting it moves 119% more than the market, indicating fast-paced momentum [5] - The stock has a Momentum Score of A, suggesting it is an opportune time to invest [6] - VSCO has received a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investors [7] - The stock is currently trading at a Price-to-Sales ratio of 0.59, indicating it is undervalued at 59 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides VSCO, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Financial Performance - In Q3 2024, net sales increased by $82 million, or 7%, to $1.347 billion compared to $1.265 billion in Q3 2023, with comparable sales up 3%[77] - North American store sales rose by 2%, or $15 million, to $738 million in Q3 2024, while direct channel sales increased by 7%, or $29 million, to $411 million[77] - Adjusted net loss attributable to Victoria's Secret & Co. was $39 million in Q3 2024, compared to a loss of $66 million in Q3 2023[83] - Year-to-date 2024 net sales increased by $25 million, or 1%, to $4.124 billion compared to $4.099 billion in year-to-date 2023[98] - Year-to-date 2024 gross profit increased by $55 million to $1.471 billion, with the gross profit rate increasing to 35.7% from 34.6%[99] - Gross profit for Q3 2024 increased by $41 million to $468 million, with the gross profit rate rising to 34.8% from 33.8% in Q3 2023[94] Operating Performance - Operating loss improved by $20 million to $47 million in Q3 2024, with an operating loss rate of (3.5%) compared to (5.3%) in Q3 2023[77] - The operating income for year-to-date 2024 was reported at $42 million, compared to an operating loss of $13 million in the same period of 2023[83] - For Q3 2024, the operating loss improved by $20 million to $47 million, with the operating loss rate improving to (3.5%) from (5.3%) compared to Q3 2023[91] Store Operations - The total number of company-operated stores decreased from 831 to 813, with 16 new stores opened and 35 closed in the U.S.[88] - Sales per average selling square foot increased by 4% to $127 in Q3 2024, while sales per average store rose by 5% to $877[87] - The average store size increased by 1% to 6,878 selling square feet in Q3 2024[87] Strategic Focus - The company continues to focus on strategic priorities: Accelerate Our Core, Ignite Growth, and Transform the Foundation[77] Cash Flow and Capital Expenditures - Net cash used for operating activities year-to-date 2024 was $249 million, an increase of $49 million compared to year-to-date 2023[109] - Capital expenditures year-to-date 2024 were $150 million, down from $224 million in year-to-date 2023[111] - The company expects capital expenditures to be approximately $190 million for fiscal year 2024[111] Debt and Financing - Total long-term debt as of November 2, 2024, was $1,414 million, a decrease from $1,530 million as of October 28, 2023[117] - The availability under the ABL Facility as of November 2, 2024, was $291 million, down from $423 million as of February 3, 2024[107] - The company has a senior secured term loan B credit facility with an aggregate principal amount of $400 million, maturing in August 2028, with quarterly principal payments of $1 million[118] - The interest rate on the term loan facility was 8.46% as of November 2, 2024, with a margin ranging from 3.36% to 3.68% based on Term SOFR[118] - The company has an asset-based revolving credit facility (ABL Facility) with aggregate commitments of $750 million, expiring in August 2026, and outstanding borrowings of $440 million as of November 2, 2024[120] - Year-to-date borrowings from the ABL Facility were $460 million in 2024, compared to $405 million in 2023, with repayments of $165 million and $145 million respectively[120] Credit Ratings and Compliance - The company maintains a negative outlook on its credit ratings, with a corporate rating of Ba3 from Moody's and BB+ from S&P[123] - The company was in compliance with all covenants under its long-term debt and borrowing facilities as of November 2, 2024[120] Investment and Risk Management - The company’s investment portfolio primarily consists of money market funds and bank deposits, with no material risk to principal associated with interest rate changes[133] - The company monitors credit exposure with financial institutions and limits exposure to any single entity, maintaining a diversified investment portfolio[136] - As of November 2, 2024, the estimated fair value of the company's publicly traded debt was $916 million, compared to a principal value of $988 million[135] Accounting and Reporting - The company has not adopted any new accounting standards during the third quarter of 2024 that had a material impact on its financial position[122]

Core Insights - Victoria's Secret reported $1.35 billion in revenue for the quarter ended October 2024, a year-over-year increase of 6.5% [1] - The EPS for the same period was -$0.50, an improvement from -$0.86 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $1.29 billion, resulting in a surprise of +4.55% [1] - The company delivered an EPS surprise of +21.88%, with the consensus EPS estimate being -$0.64 [1] Financial Metrics - Comparable Sales - Stores and Direct: 3% versus the three-analyst average estimate of -1.1% [3] - Comparable Sales - Stores Only: 2% versus -1% estimated by two analysts on average [3] - Total stores - Company-Operated: 813 compared to the 815 average estimate based on two analysts [3] - Total stores - China Joint Venture: 69 versus 70 estimated by two analysts on average [3] - Geographic Net Sales - Direct: $411 million versus the two-analyst average estimate of $378.39 million, representing a year-over-year change of +7.5% [3] Stock Performance - Shares of Victoria's Secret have returned +32.6% over the past month, outperforming the Zacks S&P 500 composite's +6.7% change [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [4]

Core Insights - Victoria's Secret reported a quarterly loss of $0.50 per share, better than the Zacks Consensus Estimate of a loss of $0.64, and an improvement from a loss of $0.86 per share a year ago, resulting in an earnings surprise of 21.88% [1] - The company achieved revenues of $1.35 billion for the quarter ended October 2024, exceeding the Zacks Consensus Estimate by 4.55% and showing growth from $1.27 billion year-over-year [2] - Victoria's Secret shares have increased by approximately 65.4% since the beginning of the year, outperforming the S&P 500's gain of 27.6% [3] Earnings Outlook - The earnings outlook for Victoria's Secret is favorable, with current consensus EPS estimates of $2.09 on $2.02 billion in revenues for the upcoming quarter and $2.01 on $6.09 billion in revenues for the current fiscal year [7] - The company has surpassed consensus EPS estimates in all four of the last quarters, indicating a positive trend in earnings performance [2] Industry Context - The Retail - Apparel and Shoes industry, to which Victoria's Secret belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net sales for Q3 2024 reached $1.347 billion, a 7% increase from $1.265 billion in Q3 2023, exceeding previous guidance of low-single digit growth [4] - The company reported a net loss of $56 million, or $0.71 per share, an improvement from a net loss of $71 million, or $0.92 per share in Q3 2023 [5] - Adjusted net loss for Q3 2024 was $39 million, or $0.50 per diluted share, better than the expected range of $0.60 to $0.80 per share [6] - Full year 2024 net sales are now forecasted to increase approximately 1% to 2%, up from prior guidance of a 1% decline [7] - Q4 2024 net sales are expected to increase approximately 2% to 4% compared to Q4 2023, with adjusted operating income projected between $240 million to $270 million [8] - Net sales for 2024 reached $4,124,059, a slight increase of 0.6% compared to $4,099,338 in 2023 [19] - Gross profit for 2024 was $1,470,968, up from $1,416,343 in 2023, reflecting a growth of 3.8% [19] - Operating income for 2024 was $41,916, a significant improvement from an operating loss of $12,800 in 2023 [19] - Net loss attributable to Victoria's Secret & Co. for 2024 was $28,067, compared to a net loss of $71,887 in 2023, indicating a reduction of 61.0% [19] - Net loss per diluted share attributable to Victoria's Secret & Co. improved to $(0.36) in 2024 from $(0.93) in 2023 [19] - Adjusted net loss attributable to Victoria's Secret & Co. was $(39,468) for 2024, compared to $(66,260) in 2023 [20] Sales and Store Performance - International sales grew over 20% in Q3 2024, contributing to overall sales strength across all regions and channels [3] - Comparable sales for Q3 2024 increased by 3%, a significant improvement from a 7% decline in Q3 2023 [17] - The company opened 67 new stores and closed 57, resulting in a total of 1,380 stores as of November 2, 2024 [17] Operational Metrics - Adjusted operating income for fiscal year 2024 is now expected to be in the range of $315 million to $345 million, up from prior guidance of $275 million to $300 million [7] - The company recognized restructuring charges of $12.5 million in Q3 2024 related to executive leadership changes [25] - Weighted average shares outstanding increased to 78,718 in Q3 2024 from 77,369 in Q3 2023 [18] - The company reported a gross profit margin of approximately 35.7% in 2024, up from 34.6% in 2023 [19] - Interest expense decreased to $65,531 in 2024 from $72,777 in 2023, reflecting a reduction of 10.0% [19] Outlook and Market Sentiment - The company is optimistic about continued momentum into the holiday season, driven by strong product acceptance and enhanced customer engagement [3]

Core Insights - Victoria's Secret & Co. reported a 7% increase in net sales for Q3 2024, reaching $1.347 billion, surpassing previous guidance of low-single digit growth [2][4] - The company raised its full-year 2024 outlook, now forecasting a net sales increase of approximately 1% to 2%, compared to prior guidance of a decline of about 1% [7] Sales Performance - Q3 sales growth was driven by mid-single digit growth in North America and over 20% growth in international markets, marking the best quarterly sales growth since 2021 [3] - Total comparable sales for Q3 2024 increased by 3%, with a notable improvement in both stores and direct sales channels [4][19] Financial Results - The company reported a net loss of $56 million, or $0.71 per share, for Q3 2024, an improvement from a net loss of $71 million, or $0.92 per share, in Q3 2023 [5][21] - Adjusted net loss for Q3 2024 was $39 million, or $0.50 per diluted share, better than the previously communicated range of $0.60 to $0.80 per share [6][25] Operational Highlights - Operating loss for Q3 2024 was $47 million, down from $67 million in the same quarter of 2023, indicating improved operational efficiency [5][21] - The company emphasized strong inventory management and cost control, contributing to improved margins compared to the previous year [3] Future Outlook - For Q4 2024, the company forecasts net sales to increase by approximately 2% to 4%, with adjusted operating income expected to be in the range of $240 million to $270 million [8][9] - The adjusted net income per diluted share for Q4 2024 is estimated to be between $2.00 and $2.30 [9] Store Operations - As of November 2, 2024, the company operated a total of 1,380 stores globally, with a net decrease of 35 stores in the U.S. [20] - The company continues to enhance its in-mall store experience and digital capabilities, driving customer engagement and sales [3]

Core Viewpoint - Victoria's Secret is expected to report a quarterly loss of $0.64 per share, which is a 25.6% increase in loss compared to the same period last year, with revenues projected at $1.29 billion, reflecting a year-over-year increase of 1.9% [1] Group 1: Earnings Estimates - The consensus EPS estimate for the quarter has been adjusted upward by 1.5% over the past 30 days, indicating a collective reassessment by analysts [2] - Changes in earnings estimates are crucial for predicting potential investor reactions, as empirical studies show a strong relationship between earnings estimate revisions and short-term stock price performance [3] Group 2: Key Metrics - Analysts estimate 'Geographic Net Sales - Direct' to be $378.39 million, showing a year-over-year decline of 1.1% [5] - The projected number of 'Total stores - Company-Operated' is 815, down from 839 a year ago [5] - Analysts expect 'Total stores - China Joint Venture' to reach 70, compared to 69 in the same quarter last year [5] Group 3: Stock Performance - Shares of Victoria's Secret have increased by 23.3% over the past month, outperforming the Zacks S&P 500 composite, which moved up by 3.5% [6] - With a Zacks Rank of 3 (Hold), Victoria's Secret is expected to mirror overall market performance in the near future [6]

Core Viewpoint - Victoria's Secret & Co. is expected to report its third-quarter 2024 results on December 5, with a consensus estimate indicating a narrowed adjusted loss per share and a slight revenue growth year-over-year [1][5]. Financial Performance - In the last reported quarter, the company's earnings exceeded the Zacks Consensus Estimate by 5.3%, with an average earnings beat of 2.9% over the last four quarters [3]. - The adjusted loss per share estimate for Q3 has improved to 64 cents from 68 cents, compared to an adjusted loss of 86 cents in the same quarter last year [5]. - Revenue consensus for Q3 is projected at $1.29 billion, reflecting a 1.9% increase year-over-year [5]. Earnings Prediction - The company has a positive Earnings ESP of +4.69%, indicating a likelihood of an earnings beat [6]. - Currently, Victoria's Secret holds a Zacks Rank of 3 (Hold) [7]. Sales Performance Factors - The third-quarter performance is expected to benefit from continued sales growth in North America, driven by strong customer response to new product lines such as the Dream bra collection and Featherweight Max sports bra [9]. - Growth in the beauty segment and strong sales in the sports bra and PINK apparel categories are also anticipated to contribute positively [10]. Margin Pressures - Increased discounting in key categories like beauty and panties may pressure margins despite higher sales volumes [11]. - Rising transportation costs, which previously acted as tailwinds, are now expected to create headwinds for gross margins in the third quarter and beyond [11]. Stock Performance and Valuation - VSCO stock has increased by 65.8% over the past three months, outperforming industry peers and the broader market [12]. - The company's forward 12-month price-to-sales ratio is 0.5, which is lower than the industry average and the S&P 500's 5.25, indicating a valuation discount [15]. Investment Outlook - Victoria's Secret shows signs of improvement with sales growth and strong performances in key product categories, supported by its customer loyalty program and digital initiatives [17]. - However, rising transportation costs and increased discounting may weigh on margins, suggesting that new investments should be approached cautiously until market conditions stabilize [18].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to investments with limited upside or potential downside [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify promising stocks [3] Group 2: Victoria's Secret (VSCO) Analysis - Victoria's Secret (VSCO) has shown significant price momentum, with a four-week price change of 30.7% and a 12-week gain of 58.1% [4][5] - The stock has a high beta of 2.1, indicating it moves 110% higher than the market in either direction, suggesting strong momentum [5] - VSCO has a Momentum Score of A, indicating a favorable time to invest based on its momentum characteristics [6] Group 3: Earnings and Valuation - An upward trend in earnings estimate revisions has contributed to VSCO earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - VSCO is currently trading at a Price-to-Sales ratio of 0.48, indicating it is attractively priced at 48 cents for each dollar of sales, providing room for growth [7] Group 4: Additional Investment Opportunities - Besides VSCO, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stocks based on various investing styles [9]