Schaeffer's Trading Floor Blog

Earnings on Deck: RetailMeNot Inc, MGM Resorts International, and DryShips Inc.

Taking a closer look at SALE, MGM, and DRYS ahead of their earnings results

by 8/4/2014 10:55 AM
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Although second-quarter earnings season is winding down, a number of companies are still on deck to report. Included in this bunch are online coupon issue RetailMeNot Inc (NASDAQ:SALE), casino concern MGM Resorts International (NYSE:MGM), and ocean transportation firm DryShips Inc. (NASDAQ:DRYS). Here's a quick look at SALE, MGM, and DRYS as earnings approach.

  • SALE will take its place on the earnings stage after tonight's close, and for the company's second quarter, Wall Street is calling for a profit of 17 cents per share -- a 2-cent decline over last year's results. Over the past four quarters, RetailMeNot Inc has exceeded consensus bottom-line estimates each time, resulting in an average one-week post-earnings gain of 5.3%. Option traders, however, have been taking the bearish route ahead of tonight's results, per the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.72, which ranks in the 98th percentile of its annual range. Simply stated, puts have been bought to open over calls with more rapidity just 2% of the time within the past year. On the charts, the security has shed more than 49% from its Feb. 27 record peak of $48.73 to trade at $24.63.

  • MGM, on the other hand, has been bouncing up the charts in recent months, thanks to a lift from its rising 140-day moving average. At last check, the shares were extending their lead over newfound support in the $26 region -- up 0.1% this morning to linger near $26.29. The stock could be poised to continue this uptrend after MGM Resorts International unveils its second-quarter results ahead of tomorrow's open. Over the past eight quarters, MGM has averaged a single-session post-earnings gain of 1.6%, which widens to 2.9% going out one week. Additionally, short interest accounts for 6.6% of MGM's available float -- or 4.3 days' worth of pent-up buying demand, at the equity's average daily trading levels -- leaving the door wide open for a short-covering rally in the event of another well-received quarterly report.

  • Tomorrow night, DRYS will step into the earnings confessional to reveal its second-quarter results, and the consensus estimate is for a per-share loss of 6 cents -- a 3-cent improvement over what the company reported one year ago. DryShips Inc. has had a dismal history in the earnings limelight, falling short of bottom-line estimates in each of the past eight quarters -- which has translated into a single-session post-earnings loss of 4.1%. This negative price action only highlights the equity's withstanding technical troubles, though, with the shares down 42% year-to-date to churn near $2.73. Not surprisingly, all five covering analysts maintain a "hold" or "strong sell" suggestion toward DRYS.

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