) 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, California.
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 Consensus Estimate.
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
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
You can follow him at
BEBE STORES INC (BEBE): Free Stock Analysis
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