Oxford Industries (OXM) is a Zacks Rank #5 (Strong Sell) that is a clothing and lifestyle company specializing in premium and upscale apparel. The company designs, sources, and markets a variety of products through a portfolio of well-known brands, including Tommy Bahama, Lilly Pulitzer, and Johnny Was.
The stock fell last week after reporting earnings but has since rallied 15%. Investors look to be getting ahead of themselves as analyst estimates are falling since the report.
About the Company
Oxford Industries was founded in 1942 and is headquartered in Atlanta, GA. The company employs about 6,000 employees and stock has a market cap of $1.4 billion.
Oxford operates a mix of direct-to-consumer channels, such as retail stores, e-commerce platforms, and wholesale distribution to specialty and department stores, allowing for a diversified revenue stream.
The stock holds Zacks Style Scores of “B” in Value, but “F” in Momentum.
Q4 Earnings
December 11th, Oxford reported a Q4 EPS miss of 200%. The company posting a loss of $(0.11) per share, which represents a sharp decline of 110.89% compared to earnings of $1.01 per share in the same quarter last year. Quarterly sales came in at $308.02 million, falling short of the $316.83 million consensus estimate and marking a 5.70% year-over-year decrease.
Looking ahead, the company revised its fiscal 2024 guidance downward, now projecting full-year sales in the range of $1.50 billion to $1.52 billion, compared to $1.57 billion in fiscal 2023. Adjusted EPS for fiscal 2024 is expected to range between $6.50 and $6.70, well below last year's adjusted EPS of $10.15.
The company anticipates higher capital expenditures of approximately $150 million for fiscal 2024, driven largely by investments in a new distribution center, store expansions, and technology upgrades, including e-commerce, AI-driven automation, and omnichannel capabilities.
Estimates Drop After Earnings
Estimates have seen a downtick since earnings were reported last week. For the current quarter, the estimates have fallen from $1.63 to $1.46, or 10%.
The next quarter has fallen only slightly, but looking long-term we see numbers falling as well.
The current year has seen a revision down from $7.16 to $6.90, or 4%. Looking at next year, analysts have dropped estimates by 5%, falling from $7.98 to $7.61.
Oxford Industries, Inc. Price and Consensus
Oxford Industries, Inc. price-consensus-chart | Oxford Industries, Inc. Quote
Following the weak Q3 results and lower-than-expected guidance, shares of Oxford Industries declined, and UBS adjusted its price target from $81 to $80.
Technical Take
While the stock initially fell, it is currently trading above pre-EPS levels. Investors might have expected a worse quarter as the stock has slumped over 20% since July.
Despite the rally, the bulls still have challenges. The 200-day resistance will be at $93 and the Fibonacci retracement level is at $95. The stock would likely need help from an already overbought market to surpass those levels. Or the fundamentals would have to turn positive.
If the bulls give up the recent gains a move under the $78 level would break the 50-day MA. This would signal that the lows of the year, at $71.50 might have to be tested once more.
In Summary
Oxford Industries faces significant headwinds despite its recent rebound. The company’s downward revisions in guidance and declining analyst estimates suggest that the current rally may be premature, especially given the ongoing fundamental challenges.
While the stock has reclaimed some ground, technical resistance levels over $90 could prove difficult to overcome without improved performance or broader market support.
For those interested in the space, a better option might be Ralph Lauren (RL). The stock is a Zacks Rank #2 (Buy) that is trading near 2024 highs.
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