My final earnings short-squeeze play is national specialty retailer of apparel for women and tween girls Ascena Retail Group (ASNA), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Ascena Retail Group to report revenue of $1.17 billion on earnings of 30 cents per share.
During the last quarter, this company reported revenue of $1.24 billion and GAAP reported sales were 44% higher than the prior-year quarter's $862 million. Also during the last quarter, this company's non-GAAP EPS was 26 cents per share and GAAP EPS was 29 cents per share, which was 28% lower than the prior-year quarter's 40 cents per share.
The current short interest as a percentage of the float for Ascena Retail Group is notable at 5.6%. That means that out of the 125.92 million shares in the tradable float, 7.11 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a sharp short-covering rally if Ascena Retail Group posts a bullish earnings report.
From a technical perspective, ASNA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $17.29 to its recent high of $20.58 a share. During that uptrend, shares of ASNA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ASNA within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on ASNA, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $20.49 to $20.58 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.42 million shares. If that breakout triggers, then ASNA will set up to re-test or possibly take out its 52-week high at $22.18 a share. Any high-volume move above that level will then put $25 to $28 into range for shares of ASNA.
I would simply avoid ASNA or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $19.50 to $19.35 a share with high volume. If we get that move, then ASNA will set up to re-test or possibly take out its next major support levels at its 200-day at $19.02 to its 50-day at $18.88 a share.
To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.
-- Written by Roberto Pedone in Madison, Wis.
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