VSCO Stock Before Q4 Earnings: Buy Now or Wait for Results?

Core Viewpoint - Victoria's Secret & Co. is set to release its fourth-quarter 2024 results on March 5, with expectations of a decline in earnings and revenues year-over-year, despite a history of earnings beats in previous quarters [1][4][17]. Earnings Performance - In the last reported quarter, the company's earnings exceeded the Zacks Consensus Estimate by 21.9%, with an average earnings surprise of 10.3% over the trailing four quarters [2][3]. - The Zacks Consensus Estimate for fourth-quarter adjusted earnings is $2.30 per share, indicating a 10.9$2.08 billion, reflecting a 0.1% year-over-year slip [4]. Factors Influencing Performance - The fourth-quarter performance is expected to benefit from strong brand momentum, digital expansion, and marketing initiatives, with North America sales estimated at $1.19 billion, implying a 3% year-over-year growth [7]. - The company reported increased foot traffic in physical stores and higher digital engagement, attributed to an enhanced product assortment and positive brand exposure from the Victoria's Secret Fashion Show [8]. - Growth in the beauty segment and strong performances in the sports bra and PINK apparel categories are also expected to contribute positively, although challenges in the intimate apparel market and economic uncertainties may negatively impact revenues [9]. Cost and Valuation Insights - The bottom line may be adversely affected by increased transportation costs and higher incentive compensation expenses [10]. - The stock has gained 2% over the past year, underperforming its industry, but has outperformed competitors like American Eagle Outfitters and Capri Holdings [11]. - Victoria's Secret is currently valued at a discount compared to its industry, with a forward 12-month price-to-sales ratio of 0.33, lower than the industry average and the S&P 500 [14]. Investment Considerations - The company has shown resilience with consistent earnings beats and strong brand momentum, particularly in North America, supported by digital expansion and product innovation [17]. - Despite trading at a discount, the stock performance has lagged, suggesting limited short-term upside potential, leading to a recommendation for investors to hold existing positions while awaiting clearer signs of sustained profitability [18].