Tailored Brands Earnings Jump Likely Boosted By Short Squeeze

Tailored Brands Inc TLRD shares were up more than 40 percent in early Thursday trading following a surprise earnings beat on Wednesday. A closer look at the numbers for the specialty apparel stock suggests a short squeeze may be playing a role in the sizable move.

Is A Short Squeeze To Blame?

Tailored Brands reported Q3 revenue of $846.9 million, down 2.1 percent year-over-year. The reported revenue came in about 1.6 percent higher than consensus Wall Street expectations. The company also reported EPS of $0.68, roughly 23.6 percent higher than analyst estimates.

The company also raised the lower end of its full-year 2016 EPS guidance by 9.6 percent to $1.70, but it left the high end of the range steady at $1.85.

None of these numbers suggest anything close to a 40 percent move in the stock’s share price, so it’s likely that other factors are at play as well.

According to shortsqueeze.com, Tailored Brands currently has a relatively high short percent of float of 26.3 percent. Tailored Brands has 11.0 million shares held short with 11.0 days to cover.

Q3 Earnings And Stock Reaction

The Q3 earnings numbers may have been enough to send shares up a significant amount on their own on Thursday, but it’s likely that they also spooked short sellers into closing their position. That short covering could be one explanation for such a dramatic move higher.

Tailored Brands’ shares are up 79.1 percent in 2016.