As of May 24, 2025, Abercrombie & Fitch Co's estimated intrinsic value ranges from $127.76 to $273.44 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $273.44 | +273.7% |
| Discounted Cash Flow (5Y) | $230.10 | +214.5% |
| Dividend Discount Model (Multi-Stage) | $130.07 | +77.8% |
| Dividend Discount Model (Stable) | $134.52 | +83.8% |
| Earnings Power Value | $127.76 | +74.6% |
Is Abercrombie & Fitch Co (ANF) undervalued or overvalued?
With the current market price at $73.17, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Abercrombie & Fitch Co's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.67 | 0.8 |
| Cost of equity | 6.9% | 9.3% |
| Cost of debt | 4.5% | 7.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.1% | 7.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $230 | $10,189M | 75.8% |
| 10-Year Growth | $273 | $12,254M | 60.8% |
| 5-Year EBITDA | $120 | $4,949M | 50.2% |
| 10-Year EBITDA | $167 | $7,198M | 33.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $321M |
| Discount Rate (WACC) | 7.4% - 5.1% |
| Enterprise Value | $4,353M - $6,275M |
| Net Debt | $(773)M |
| Equity Value | $5,125M - $7,048M |
| Outstanding Shares | 48M |
| Fair Value | $108 - $148 |
| Selected Fair Value | $127.76 |
| Metric | Value |
|---|---|
| Market Capitalization | $3486M |
| Enterprise Value | $2713M |
| Trailing P/E | 6.16 |
| Forward P/E | 5.81 |
| Trailing EV/EBITDA | 3.15 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | -100.00% |
| Debt-to-Equity Ratio | 1.19 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $82.03 |
| Discounted Cash Flow (5Y) | 25% | $57.52 |
| Dividend Discount Model (Multi-Stage) | 20% | $26.01 |
| Dividend Discount Model (Stable) | 15% | $20.18 |
| Earnings Power Value | 10% | $12.78 |
| Weighted Average | 100% | $198.52 |
Based on our comprehensive valuation analysis, Abercrombie & Fitch Co's weighted average intrinsic value is $198.52, which is approximately 171.3% above the current market price of $73.17.
Key investment considerations:
Given these factors, we believe Abercrombie & Fitch Co is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.