Schaeffer's Trading Floor Blog

Earnings on Deck: CVS Caremark Corporation, TripAdvisor Inc, and The Western Union Company

Previewing CVS, TRIP, and WU ahead of Tuesday's earnings reports

by 2/10/2014 12:21 PM
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Headed to the earnings confessional on Tuesday are pharmacy concern CVS Caremark Corporation (NYSE:CVS), online travel issue TripAdvisor Inc (NASDAQ:TRIP), and money movement mogul The Western Union Company (NYSE:WU). Here's a quick look at these names as earnings approach.

  • CVS Caremark Corporation (NYSE:CVS) -- currently up 0.2% at $66.57 -- will report fourth-quarter earnings before the opening bell tomorrow. The company last week announced plans to stop selling tobacco -- at the cost of about $2 billion in annual sales -- come October, but said the decision won't impact its 2014 earnings guidance. Near-term option traders are more put-heavy than usual heading into the report, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.71 stands just 5 percentage points from an annual high. Historically, CVS has topped Wall Street's per-share earnings projections in each of the past seven quarters, but the stock's reactions have been relatively tame. Specifically, CVS averages a loss of 0.02% in the week after reporting.

  • TripAdvisor Inc (NASDAQ:TRIP) will unveil its fourth-quarter figures after the closing bell tomorrow. The firm has matched or exceeded the consensus bottom-line earnings estimate in each of the last seven quarters, averaging a gain of 5.9% the week after reporting. As my colleague Milissa Hudepohl noted, option players are purchasing TRIP calls over puts at an accelerated clip, though some of that activity could be attributable to hedging among the shorts. Short interest accounts for 17.6% of TRIP's total available float, and would take nearly 12 sessions to unwind, at the equity's average pace of trading. TRIP was last seen 1.1% lower at $83.55.

  • Finally, The Western Union Company (NYSE:WU) will release its fourth-quarter earnings report after the close tomorrow. While the company has matched or exceeded Wall Street's per-share estimates in each of the last seven quarters, the shares average a loss of 3.3% in the week after reporting. It's no surprise, then, to find option players picking up WU puts over calls at a faster-than-usual clip during the past two weeks. The stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 3.89 -- just 2 percentage points from a 12-month acme. Around midday, WU is flirting with a 0.2% lead at $15.67.

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