Stitch Fix (SFIX) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Stitch Fix (SFIX) closed the most recent trading day at $24.08, moving -1.99% from the previous trading session. This change lagged the S&P 500's 0.28% loss on the day. At the same time, the Dow lost 0.39%, and the tech-heavy Nasdaq lost 0.45%.

Coming into today, shares of the online clothing styling service had lost 4.29% in the past month. In that same time, the Retail-Wholesale sector lost 3.41%, while the S&P 500 lost 1.21%.

Investors will be hoping for strength from SFIX as it approaches its next earnings release, which is expected to be June 5, 2019. The company is expected to report EPS of -$0.03, down 133.33% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $394.58 million, up 24.58% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.22 per share and revenue of $1.55 billion, which would represent changes of -43.59% and +26.55%, respectively, from the prior year.

Any recent changes to analyst estimates for SFIX should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. SFIX currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that SFIX has a Forward P/E ratio of 112.41 right now. For comparison, its industry has an average Forward P/E of 12.55, which means SFIX is trading at a premium to the group.

We can also see that SFIX currently has a PEG ratio of 5. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Apparel and Shoes was holding an average PEG ratio of 1.21 at yesterday's closing price.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 65, which puts it in the top 26% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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