Children’s Place Continues to Confound Short Sellers with Q2 Earnings Beat

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August 17, 2016 10:40am NASDAQ:PLCE

Hoards of short sellers have been circling Children’s Place Inc (NASDAQ:PLCE) recently, but the company just keeps on defying expectations and posting impressive growth.


The Secaucus, NJ-based company’s latest quarterly results are only adding to the shorts’ pain. PLCE posted much better-than-expected earnings this morning, beating Q2 estimates by a whopping $0.21 per share.

The company’s comparable sales results also exceeded expectations, raised its full-year outlook, and kept its quarterly dividend unchanged as well.

From the press release:

Jane Elfers, President and Chief Executive Officer, commented, “The continuation of the quarterly dividend is a further reflection of our confidence in our ability to execute on our strategic initiatives and our continuing commitment to return excess capital to shareholders. The Children’s Place has a profitable business model which generates strong cash flow. Since 2009, we have returned over $710 million to shareholders through dividends and share repurchases,” concluded Ms. Elfers.

The company continues to succeed despite strong short interest in its stock. According to ShortQueeze.com, more than 21% of the stock’s float is owned by short sellers:

plce-short-squeeze

This high short percentage means that more than one in five investors that own PLCE shares are betting on a share price decline. That puts the stock in the top 250 or so most shorted U.S. stocks on the three major exchanges.

Despite so many investors betting on a price drop, Children’s Place shares rose $0.71 (+0.83%) to $86.57 in Wednesday morning trading. PLCE has gained nearly 57% since the start of 2016, easily outpacing the S&P 500’s 7% gain in the same period — much to short sellers’ chagrin.

PLCE-2016-08-17

If PLCE keeps the gains up, a wave of short covering could well propel the stock even higher, as traders facing steep losses decide to exit their positions.


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