FIGS Q2 Earnings Preview: Is Another Beat in the Cards?

FIGS has a trailing four-quarter earnings surprise of 212.5%, on average. In the last reported quarter, this Santa Monica, CA-based company beat the Zacks Consensus Estimate by 200%. 

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What the Zacks Model Indicates for FIGS’ Q2 Earnings

As investors prepare for FIGS’ second-quarter results, the question looms regarding an earnings beat or miss. Our proven model does not conclusively predict an earnings beat for FIGS this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

FIGS has a Zacks Rank #2 but an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Likely to Have Shaped FIGS’ Q2 Outcome

FIGS’ second-quarter performance is likely to have benefited from sustained momentum in its core business, supported by healthy customer engagement and continued demand for premium healthcare apparel. Management entered the quarter highlighting broad-based strength across categories, geographies and selling occasions while emphasizing that growth was being driven not only by new customer acquisition but also by improving retention and repeat purchasing. The company also pointed to the replenishment-driven nature of healthcare apparel and favorable long-term industry fundamentals, suggesting that demand remained resilient despite a mixed consumer environment. These trends are likely to have supported sales growth.

Product innovation and merchandising initiatives are also likely to have been major drivers during the quarter. FIGS continued to expand its assortment through new fabric platforms, broader layering options and fresh product launches designed to meet a wider range of healthcare professionals’ needs. Seasonal color introductions, the return of popular colors, new maternity offerings and branded collaborations should have encouraged repeat purchases. At the same time, investments in inventory planning tools and supplier partnerships are expected to have improved product availability and enabled the company to respond more quickly to changing customer preferences, supporting stronger full-price demand.

The company’s brand-building initiatives and market expansion efforts are also likely to have contributed to second-quarter performance. Management remained focused on deepening engagement with the healthcare community through purpose-driven marketing campaigns, advocacy initiatives and on-campus events while continuing to strengthen its digital-first ecosystem. International expansion, optimization of existing community hubs and ongoing investments in the TEAMS business are expected to have broadened FIGS’ reach and created incremental demand. 

Despite these favorable trends, second-quarter profitability may have faced pressure from external cost headwinds. Higher inbound and outbound freight expenses tied to elevated fuel costs, along with tariff-related impacts, might have weighed on margins during the period. The company also planned a more measured promotional approach during Nurses Week compared with the prior year, which may have tempered some event-driven demand.

FIGS Stock Price Performance

Shares of FIGS have fallen 25.2% over the past three months against the industry’s rise of 3.4%. The stock has underperformed lululemon athletica inc. LULU and Superior Group of Companies, Inc. SGC. While shares of Superior Group of Companies have advanced 16.6%, those of lululemon athletica have declined 6.8% over the same period.

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Does FIGS Present a Strong Case for Value Investing?

FIGS’ valuation remains elevated relative to the industry. The stock trades at a forward 12-month price-to-sales multiple of 2.38, above the industry average of 1.85 but below its 12-month median of 2.68. FIGS trades at a premium to lululemon athletica (with a forward 12-month P/S ratio of 1.30) and Superior Group of Companies (0.37)

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Final Words on FIGS

FIGS appears well positioned heading into its second-quarter earnings, supported by healthy demand trends, continued product innovation and expanding customer engagement across its core and international markets. However, the lack of a positive Earnings ESP suggests that another earnings beat is not strongly indicated despite the company's impressive history of surpassing expectations. While long-term fundamentals remain encouraging and the favorable Zacks Rank reflects confidence in the business, near-term margin pressures from tariffs, freight costs and ongoing growth investments could limit upside. Investors already holding the stock may consider maintaining their positions ahead of the release, while prospective investors may prefer to wait for the earnings report and management's commentary before initiating new positions.

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This article originally published on Zacks Investment Research (zacks.com).

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