Schaeffer's Trading Floor Blog

Earnings on Deck: FedEx Corporation, General Mills, Inc., and KB Home

Previewing FDX, GIS, and KBH ahead of Wednesday's earnings reports

by 3/18/2014 12:36 PM
Stocks quoted in this article:

Headed to the earnings confessional on Wednesday are package delivery titan FedEx Corporation (NYSE:FDX), branded food producer General Mills, Inc. (NYSE:GIS), and housing giant KB Home (NYSE:KBH). Here's a quick look at these names as earnings approach.

  • FedEx Corporation (NYSE:FDX) will report fiscal third-quarter earnings before the opening bell tomorrow. The company has surpassed the Street's bottom-line estimates in five of the last eight quarters, yet averages a one-week post-earnings loss of 1.7%. Ahead of earnings, options traders are loading up on long puts at a faster-than-usual clip, relative to calls, as the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.65 sits just 9 percentage points from an annual peak. In addition, short interest represents nearly a week's worth of pent-up buying demand, at FDX's average pace of trading. At last check, FDX is up 1% at $138.93, but remains 3.4% lower in 2014.

  • General Mills, Inc. (NYSE:GIS) will also unveil its fiscal third-quarter earnings bright and early tomorrow. Historically, the firm has matched or exceeded analysts' per-share profit projections in seven of the last eight quarters, averaging a gain of 0.8% in the subsequent week after reporting. As with FDX, GIS options buyers are picking up bearish bets over bullish at an accelerated pace, as the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 6.49 rests just 1 percentage point from a 12-month high. In the same skeptical vein, it would take nearly seven sessions to repurchase all of the GIS shorted shares, at the stock's typical trading volume. In early afternoon trading, the stock is 0.8% higher at $50.82.

  • Finally, KB Home (NYSE:KBH) is 1.6% higher at $17.54, thanks to some encouraging housing data. The company is set to report fiscal first-quarter earnings in pre-market action tomorrow, and has topped the Street's per-share profit predictions in six of the last eight quarters. On the charts, KBH averages an upside reaction of 1% in the week after reporting, and another solid earnings showing could translate into a short-squeeze situation for the shares. Specifically, short interest accounts for 28% of KBH's total available float, representing more than five sessions' worth of pent-up buying demand, at the stock's average daily trading volume. What's more, just two out of 15 analysts consider the security worthy of a "buy" or better endorsement, leaving the door wide open for a round of post-earnings upgrades, should KB Home once again unveil stronger-than-expected results.

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