Aritiza (TSX:ATZ) inventory simply appears to maintain doing higher and higher. The retailer has exploded since seeing main enlargement in the USA, and shares hold reflecting that. As of writing, shares of Aritzia inventory are up a whopping 57% 12 months so far, and 70% within the final 12 months! Now, with earnings on the way in which on Oct. 9, ought to buyers purchase in earlier than one other increase?
Trying again
Earlier than we get into what to anticipate, let’s take a fast look again at what occurred in the course of the first quarter of 2026 for Aritzia inventory. Through the quarter, the retail inventory reported a 33% enhance in internet income and comparable gross sales up 19.3% 12 months over 12 months. What’s extra, profitability improved materially, with gross margins as much as 47.2%.
Now, the corporate is in an extremely robust place, with money of $292.6 million, greater than double final 12 months, and stock at $409.5 million. In the meantime, debt is at $906.5 million, with debt-to-equity (D/E) at an inexpensive 80% and money circulate coming in at $543.6 million. So, what can buyers sit up for for the second quarter?
Q2 coming in
First, let’s take a look at what administration expects for the second quarter of 2026. Through the first quarter, administration elevated steering to hit income between $730 and $750 million. This is able to be a 19% to 22% enhance 12 months over 12 months, with full-year income anticipated between $3.1 and $3.25 billion. In the meantime, Aritzia inventory elevated its adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) margin to between 15.5% and 16.5%.
The optimistic outlook comes from robust outcomes coupled with its U.S. enlargement outcomes. The margin positive factors have fuelled investor enthusiasm that doesn’t appear to be going wherever. And this has been seen by that giant enhance of as much as 70% within the final 12 months! So, is it a purchase?
Issues
Right here’s the place we’ve to dig into worth. Whereas the corporate has proven unimaginable outcomes, there’s at all times the potential of a drop in share value from even barely lacking earnings estimates. And proper now, the corporate isn’t precisely undervalued. Aritzia inventory presently trades at 34 occasions earnings, 3.5 occasions gross sales, and eight.8 occasions ebook worth. None of those numbers screams “worth.”
What’s extra, Aritzia inventory doesn’t provide a dividend. It does, nonetheless, provide returns to shareholders by buybacks. This has been authorized for as much as 5% of its float. Nonetheless, so far, there have solely been modest repurchases of about 15,200 shares within the first quarter.
Backside line
All in all, buyers shopping for Aritzia inventory right this moment anticipate both earnings that meet or ideally beat estimates. And proper now, that does look possible with additional retailer openings and enlargement throughout the USA. Nonetheless, it additionally meets and beats these must hold coming quarter after quarter if buyers need these share costs to maintain hovering upwards. What buyers might want to hold watching are the tariff and commerce dangers related to Aritzia inventory. This has already been flagged by administration. Moreover, any missteps in expansions and ecommerce development might significantly harm the inventory. And buybacks aren’t precisely large. For now, I’d wait till earnings come out earlier than shopping for Aritzia inventory, as worth simply isn’t there at this stage.
