Lands’ End still has a lot to prove, but recent earnings growth looks promising
Retail inventory Lands’ End, Inc. (NASDAQ: LE) will not report on the results again until September, but it is still worth taking a look under the hood. The stock is up 79% year-to-date, hitting a six-year high of $ 42.10 on July 12, but a pessimism has built that could make it an intriguing contrary pick this summer.
There is potential for short squeeze, with short rates increasing by 6.8% in the last two reporting periods. The 4.10 million short stocks sold represent 6.5% of LE’s total available float, and at the stock’s average trading speed, it would take more than four days for shorts to buy back their bearish bets.
In addition, Lands’ End has exceeded profit expectations across the board in all four of its most recent earnings reports. For the first quarter of fiscal 2020, LE beat analyst estimates by a margin of $ 0.44 and reported earnings per share (EPS) of $ 0.13. In the second quarter of fiscal 2020, Lands’ End earnings per share rose to $ 0.22, beating expectations by $ 0.18. For the third quarter of fiscal 2020, LE reported another surge in earnings, rising to $ 0.60 per share, beating estimates by $ 0.05. For the fourth quarter of fiscal 2020, Lands’ End posted earnings per share of $ 0.08, beating expectations by $ 0.37. Analysts currently expect earnings per share of $ 0.07 for the first quarter of fiscal 2021.
LE has remained constant with its sales, but has not seen any significant growth until recently. The retail company’s last 12-month sales are currently 7% higher than it was for fiscal 2020, far exceeding the 1.5% sales growth reported between fiscal 2017 and fiscal 2020. The bottom line was that Lands’ End was less consistent. However, LE has also seen an increase in net income growth recently. Specifically, Lands’ End has increased its net income by 215% over the past 12 months from the report reported for fiscal 2020.
Overall, there are signs that the company still has room to expand its business. The most impressive accomplishment to date has been arguably the net income growth that drove Lands’ End stock up over the past year. Still, Lands’ End remains the task of sustaining high growth to justify the high price / earnings ratio of 37.62.