Key Takeaways from L Brands’ 4Q17 Results



L Brands’ 4Q17 results

L Brands (LB) reported its 4Q17 financial results after the market closed on February 28, 2018. The results relate to the three-month period ending on February 3, 2018.

L Brands cruised ahead of Wall Street analysts’ top and bottom-line expectations during the quarter. The company’s adjusted diluted EPS (earnings per share) increased 3.9% YoY (year-over-year) to $2.11—$0.06 more than the consensus expectations.

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L Brands’ sales rose 7.4% to $4.82 billion and beat analysts’ forecast by $100 million. The company managed to exceed analysts’ earnings expectations in all four quarters, although it missed the top-line forecast in the first quarter. In Part 2 and Part 3 of this series, we’ll discuss L Brands’ 4Q17 and fiscal 2017 performance.

Stock market reaction

Despite the earnings beat, L Brands’ stock price fell ~14% the next trading day. The decline was mainly related to the company’s weak guidance for the next quarter. In Part 4, we’ll discuss the recent price plunge and L Brands’ YTD (year-to-date) stock market performance.

Wall Street’s reaction to L Brands’ results

L Brands was downgraded by at least one analyst, while its target price was lowered by several analysts after its 4Q17 results. Telsey Advisory Group downgraded the company to “market perform” from “outperform” on March 1.

L Brands operates through 3,075 company-owned specialty stores and more than 800 franchised locations worldwide.

The company recorded trailing 12-month sales of $13 billion with a market capitalization of $14 billion as of March 2, 2018.

Investors looking to invest in L Brands through ETFs could consider the WisdomTree Dividend Ex-Financials Fund (DTN). L Brands accounts for 1.2% of DTN.


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