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L Brands’ Stock Price Hit by Revised 1Q18 Earnings Outlook

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L Brands stock

On May 10, L Brands (LB) stock slid more than 7% in the stock market. L Brands’ management revised its 1Q18 profit outlook. Management said it expects the earnings per share to be at the lower end of its $0.15–$0.20 guidance range.

L Brands is scheduled to report its 1Q18 results on May 23. However, the company reported strong quarterly sales in 1Q18. The total sales increased 8% year-over-year to $2.63 billion for the quarter.

In Part 2, we’ll discuss L Brands’ key revenue drivers for the quarter.

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Stock market performance

L Brands’ stock market performance hasn’t been impressive in 2018. L Brands’ share price has fallen more than 47% YTD (year-to-date).

The plunging share price also impacted L Brands’ valuations. The company is trading at a discount to most of its peers. L Brands is also trading cheaper historically. In Part 3, we’ll discuss L Brands’ recent stock yields and valuations.

Analysts’ recommendations

Yesterday’s price crash led to a series of analyst actions on the company. Loop Capital downgraded L Brands to “sell” from “hold” and cut the target price to $28 from $40.

Several other analysts reduced their target price on L Brands including Jefferies (from $30 to $23), RBC (from $44 to $40), Keybanc (from $32 to $28), and Cowen and Company (from $40 to $30).

Investors wanting to get exposure to L Brands could consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD). RCD invests 1% of its portfolio in L Brands.

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