Here is Why Traders Need to Watch Lands End Stock

LE stock has already grown by 79% in 2021

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Retail stock Lands' End, Inc. (NASDAQ:LE) won't report earnings again until September, but is worth a look under the hood all the same. The stock is up 79% year-to-date and scored a six-year high of $42.10 on July 12, but has pessimism built up around it that could make it an intriguing contrarian pick this summer. 

There's short squeeze potential building, with short interest up 6.8% in the two most recent reporting periods. The 4.10 million shares sold short accounts for 6.5% of LE's total available float, and at the stock's average pace of trading, it would take more than four days for shorts to buy back their bearish bets.

Furthermore, on the earnings front, Lands’ End has across-the-board outperformed earnings expectations on all four of its most recent earnings reports. For Q1 of fiscal 2020, LE beat analyst estimates by a margin of $0.44 and reported an earnings per share (EPS) of $0.13. For Q2 of fiscal 2020, Lands' End's EPS increased to $0.22 and beat expectations by a margin of $0.18. For Q3 of fiscal 2020, LE reported another increase in earnings, rising to $0.60 per share and beating estimates by a margin of $0.05. For Q4 of fiscal 2020, Lands’ End posted an EPS of $0.08 and beat expectations by a margin of $0.37. Analysts are currently expecting an EPS of $0.07 for Q1 of fiscal 2021.

LE has remained consistent with its revenue output, but had not seen any significant growth until recently. The retail company’s trailing 12-month revenues are currently up by 7% compared to what was reported for fiscal 2020, which far exceeds the 1.5% revenue growth reported between fiscal 2017 and fiscal 2020. On the bottom-line, Lands’ End has been less consistent. However, LE has also seen a recent spike in net income growth. Specifically, Lands' End has increased its trailing 12-month net income by 215% compared to what was reported for fiscal 2020.

Overall, the company is beginning to show signs that it still has room to expand its business. The most impressive feat thus far has undoubtedly been in net income growth, which has sent Lands' End stock flying up in value over the past year. Nonetheless, Lands’ End will remain tasked with maintaining a high growth in order to justify its high price-earnings ratio of 37.62.


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