Estimates Are Up, So Why Not the Stock?

Several retailers --JC Penney for example -- are modestly raising 2009 earnings estimates. So why aren't the stocks up today?

Because the Street has caught up to the guidance. Take JC Penney--full-year guidance is raised to $0.75-$0.90, but analysts already have estimates of $0.89.

In other words, JCP guidance is conservative. Their philosophy is to set the bar low and beat it. But the Street is hip to that, and with a stock runup of 25 percent IN A MONTH, nobody is impressed with this.

As for Abercombie & Fitch, you might be amazed that the stock is flat, given a rather poor showing for the second quarter--30 percent decline in same-store sales. The stock is up 49 percent in a month, and it would certainly make sense to take profits here.

But Abercrombie is an unusual story. One retail stocks trader told me they were "hanging tough on maintaining their luxury positioning to protect international expansion...the growth is international. They got lots of cash and will wait it out."

Indeed, the company announced they were opening 3 international flagship stores (2 in Milan, 1 in Tokyo) and 10 mall-based international stores.



Questions? Comments?