Short Sellers Load Up on Pacific Sunwear, Unload SUPERVALU (PSUN, SHLD, SVU)
Overall, the short interest moves in troubled retail companies were mixed again during the first weeks of July.
And the number of shares sold short in Barnes & Noble (NYSE: BKS), Bebe Stores (NASDAQ: BEBE), Best Buy (NYSE: BBY), J.C. Penney (NYSE: JCP), OfficeMax (NYSE: OMX), RadioShack (NYSE: RSH) and Rite Aid (NYSE: RAD) increased somewhat in that time.
Here is a quick look at how Pacific Sunwear, Sears Holdings and SuperValu have fared and what analysts expect from them.
This Anaheim, California-based specialty retailer saw short interest swell more than 25 percent in the initial weeks of the month to around 7.01 million shares. The number of shares sold short was more than 15 percent of the total float, and days to cover rose to more than nine for the first time since May.
Pacific Sunwear now has a market capitalization of about $290 million. The consensus forecast calls for it to report break-even earnings results for the current quarter and the next, as well as a net loss for the year. The return on equity and the operating margin are both in negative territory.
Of the 12 analysts who follow the stock that were surveyed by Thomson/First Call, just five recommend buying shares; the rest recommend holding them. The current share price is higher than their mean price target, or where they expect the share price to go, indicating no potential upside at this time.
Shares are trading near the multiyear high after surging more than 32 percent in the past month. The stock has outperformed competitors such as Abercrombie & Fitch (NYSE: ANF) and Aeropostale (NYSE: ARO), as well as the S&P 500, over the past six months.
The number of shares sold short in this once-venerable retailer has been rising since mid-May and reached more than 13.45 million in mid-July. That was about a nine percent gain from the previous period, and more than 17 percent of the float. The days to cover rose to about 19.
This company operates more than 2,000 Sears and Kmart stores in the United States, and it faced numerous reports that it was a "sinking ship" in the first weeks of July. The market cap is more than $4 billion. Sears does not offer a dividend. Here too, the operating margin and return on equity are in the red.
Two of four analysts polled recommend holding shares, and the others recommend selling. It is little surprise that the current share price is well above the mean price target. Yet one analyst's price target suggests that there is more than 18 percent upside potential.
Shares have traded mostly between $42 and $45 for the past few weeks, though the share price is more than two percent higher year-to-date. The stock has underperformed Target (NYSE: TGT) and Walmart (NYSE: WMT), as well as the broader markets, over the past six months.
This operator of retail and wholesale food stores saw short interest drop more than 15 percent in the period to about 43.54 million shares. That was the lowest number of shares sold short in at least a year. The short interest is still more than 21 percent of the float. Days to cover rose to more than 10.
SUPERVALU's current market cap is about $2 billion. Analysts expect to see some year-over-year growth of EPS in the current quarter and the next, but on significant revenue declines. The long-term earnings EPS growth forecast is more than 10 percent, but its operating margin is less than the industry average.
Of the 13 analysts surveyed, all but one recommend holding shares. The consensus has been to hold the stock for the past three months. So it is not much of a surprise that the share price has overrun the analysts' mean price target here as well. They do not see any upside potential at this time.
The share price is about 29 percent higher than a month ago and recently reached a new 52-week high. It is up about 316 percent year-over-year. The stock has outperformed Kroger (NYSE: KR) and Safeway (NYSE: SWY), as well as the broader markets, over the past six months.
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