by Ian Harvey
IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.
Tuesday, 30th August, 2016
Chico's FAS, Inc. (NYSE:CHS) Puts
**OPTION TRADE: Buy the CHS SEPT 16 2016 11.000 put at approximately $0.30. Sell price is left to your own judgment.
Chico's FAS, Inc. (NYSE: CHS), a specialty retailer of women’s private branded, casual-to-dressy clothing, intimates, complementary accessories and other non-clothing items operating under the Chico’s, White House Black Market (WHBM) and Soma brand names, is scheduled to post its second-quarter numbers before the market open on August 31. Analysts forecast earnings of $0.22 per share, down from $0.25 during the same period last year.
That would represent a -12 per cent year-over-year decrease. Revenue for the same quarter is predicted to arrive at $632.06M.
In the last fiscal quarter alone, Chico’s FAS Inc. delivered a negative earnings surprise of 19.4%, generating nearly $642.98M in sales and net income of $0.25/share. That compares with the mean forecast $667.86M and $0.31/share, respectively. For the prior quarter, revenue for the stock hit $627.4M, with an EPS of $0.05.
The stock has appreciated 10.8% during the year.
Chico’s expects the ongoing trends of weak traffic and soft sales to linger in fiscal 2016. Consequently, the company expects fiscal 2016 to witness a low-single digit decline in comps over the remaining period. Gross margin deleverage is now expected in fiscal 2016, compared with the previous flat guidance. This is because the company now anticipates SG&A deleverage owing to the tough sales environment.
As well, Deutsche Bank's Paul Trussell commented on Chico’s soon-to-be-released earnings report. The analyst remained cautious given elevated inventories heading into Q2 and a competitive women's apparel environment. The analyst, however, admitted Chico's would "pick up steam" later in the year.
Chico's inventories would work against its margins, and Trussell has a Hold rating on Chico's.
Also, corporate insiders look pessimistic about the outlook of the company stock that they seem to offloaded a great deal of shares recently. A Brand President WH|BM at Chico’s FAS Inc. (CHS) sold shares in a trading activity completed on Monday April 04, 2016. Noce Colaco Donna offloaded 40,000 shares in the company at a per-share price of $13.02 and ended up generating $520,800 in proceeds. A Director in the company, Dyer David, on Wednesday March 30, 2016 collected $1,194,700 from the sale of 92,184 shares at a per-share price of $13.02. Insiders are expected to have better knowledge about the health and prospects of their company, which is why insiders’ moves deserve attention.
Ten investment analysts have rated the stock with a hold rating and nine have assigned a buy rating to the company’s stock. Chico’s FAS has an average rating of “Hold” and a consensus price target of $13.28.
Chico’s FAS Inc. will open at $11.83 on Tuesday. The company’s 50 day moving average price is $11.66 and its 200 day moving average price is $11.77. The stock’s market cap is $1.56 billion. Chico’s FAS Inc. has a 52-week low of $9.61 and a 52-week high of $17.09.
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