Chico's FAS: Shares On Clearance Rack After Another Beat-And-Raise

Nov. 28, 2022 8:00 AM ETChico's FAS, Inc. (CHS)21 Comments
The Bulls Bay profile picture
The Bulls Bay
352 Followers

Summary

  • Chico's FAS shares have fallen 14% since reporting its third consecutive beat-and-raise.
  • Q3:F2022 EPS of $0.20 beat the $0.13 consensus estimate by 50%, while full-year F2022 EPS guidance was raised by approximately 10%.
  • Management indicated that Q4 began with strong customer trends, including traffic, conversion, and average dollar sale.
  • This retailer trades at 7x F2022 EPS guidance, despite double-digit sales and earnings growth, and net cash of more than $70 million (10% of market capitalization).
  • With short interest 15% of its float, CHS could be ripe for a massive short squeeze in the near term.

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Introduction

Chico's FAS (NYSE:CHS) shares dropped 14% during the two trading days since issuing its Q3:F2022 earnings report, its third consecutive beat-and-raise. In our view, this sell-off is unwarranted based on the company's absolute and relative performance and comparative valuation. In this article, we

This article was written by

The Bulls Bay profile picture
352 Followers
The Bulls Bay is the founder and portfolio manager of a family office. Previously, he was a sell-side equity research analyst covering consumer/retail and later a senior analyst at a long/short, special situations hedge fund. He is particularly attracted to value, deep value, and special situations equities across industries, while specializing in consumer/retail. In addition, The Bulls Bay sells covered calls as an opportunistic options strategy.

Disclosure: I/we have a beneficial long position in the shares of CHS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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