bebe stores (BEBE - Snapshot Report) is about to report earnings and could be a short squeeze candidate. The stock has beaten earnings for three straight quarters which has helped make it a Zacks #1 Rank (Strong Buy).
bebe stores engages in the design, development, and
production of women's apparel and accessories. Its products
include a range of separates, tops, dresses, active wear, and
accessories in career, evening, casual, and active lifestyle
categories. The company markets its products under the bebe, BEBE
SPORT, bbsp, and 2b bebe brand names targeting 21 to 34-year-old
woman. As of July 2, 2011, it operated 252 retail stores. The
company was founded in 1976 and is headquartered in Brisbane,
bebe Meets or Beats in Three Straight Quarters
bebe has met or topped earnings estimates in three straight
quarters. Over the course of the last three quarters,
the company has topped the Zacks Consensus Estimate by an average
of $0.01, but the percent beat averages out to be 88%. Those are
some heavy pennies! The stock, however, has only moved by an
average of 2.7% following the big beats.
In the September 2011 quarter, the stock rose 5.1% following a
200% beat of the bottom line. The company reported earnings of
$0.03, $0.02 better than the Zacks Consensus Estimate and were
400% higher than year ago levels. Revenues of $126 million were $4
million ahead of the Zacks Consensus Estimate and showed an
increase of 6.7% from the year ago period.
bebe Most Recent Reported Earnings
On February 2, 2012 bebe reported revenue of $152
million, roughly $4 million ahead of the Zacks Consensus Estimate
and up from $136 million reported in year ago quarter. In
addition, earnings per
share came in at $0.08, $0.01 higher than
the Zacks Consensus Estimate of $0.07. The beat of 14% was the
smallest since the March 2011 quarter when bebe met the Zacks
bebe Expected to Report Earnings
bebe is expected to report earnings on May 3, 2012. The Zacks
Consensus Estimate is calling for revenue of $119 million and EPS
of $0.01. The year ago period saw revenue of $109 million and a
loss of $0.03. Following the release last year, the stock moved
higher by 4.7%.
bebe Earnings a Squeeze Play
From the end of January 2012, through the middle of February,
short interest in bebe shares decreased from 1.6 million shares to
1.5 million shares. The early February earnings release
undoubtedly aided in the squeeze over that time period, but since
mid-February, short interest has increased. The most recent data
from NASDAQ shows short interest as being more than 1.625 million
shares. Should the company beat estimates, then there could
likely be another short squeeze.
The valuation picture for bebe is more towards the higher end,
just like the apparel it sells. The trailing PE of 58x is more
than double the industry average of 24x and the forward PE of 38x
is double the 19x industry average. The price to book is a more
reasonable multiple coming in at 1.9x compared to a 3.3x industry
average. The price to sales multiple of 1.3x is also much closer
to the industry average of 0.9x.
Like most of the rest of the market, bebe saw a great run from
November 2011 through March 2012. Toward the end of March, the
stock retreated from nearly $9.50 to the current level near $8.
This weakness could provide a great entry point for aggressive
growth investors looking to participate in a potential earnings
short squeeze should the company beat earnings and convey a
positive outlook for the near term. bebe Zacks #1
Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1