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Savings Experiment: Snow RemovalShares of trendy retailer The Buckle, Inc. (NYSE: BKE) are climbing today, boosted by a better-than-expected fourth-quarter earnings report. Net income rose 18% to $34.3 million, or 74 cents per share, while gross margin swelled to 46.1%. Ahead of the report, analysts were expecting a quarterly profit of 73 cents per share.
The Buckle reported that net sales for the quarter increased by 22% to $251.4 million, thanks to a 14.3% spike in same-store sales. Sales at stores open for at least one year escalated 21% in February, marking the 19th consecutive month of double-digit same-store sales growth.
Investors had low expectations for BKE's earnings, as evidenced by a steady increase in bearish bets on the stock. During the past 10 days, option traders on the International Securities Exchange (ISE) and the Chicago Board Options Exchange (CBOE) bought to open an average of 3.55 puts for every call. Elsewhere, short interest represents a lofty 21.5% of the security's available float.
In light of the stronger-than-expected results, some of these skeptics are rushing for the exits. BKE has added roughly 5% today, extending its year-to-date advance of 9.4%. The equity's momentum could stall out near the 26 level, which previously acted as resistance in mid-December. However, a continued capitulation by the bears could provide enough buying pressure to launch BKE above this technical barrier.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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