Schaeffer's Trading Floor Blog

Earnings on Deck: AOL, Inc., Keurig Green Mountain Inc, and Molycorp Inc

Previewing AOL, GMCR, and MCP ahead of their upcoming earnings reports

by 5/6/2014 12:28 PM
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Earnings season continues to roll on, with DIRECTV (NASDAQ:DTV) and Office Depot Inc (NYSE:ODP) among the latest to report. Among the companies scheduled to report tomorrow are Internet issue AOL, Inc. (NYSE:AOL), java giant Keurig Green Mountain Inc (NASDAQ:GMCR), and rare earths concern Molycorp Inc (NYSE:MCP). Here's a quick look at these names as earnings approach.

  • AOL, Inc. (NYSE:AOL) will report first-quarter earnings bright and early tomorrow. The firm has matched or exceeded analysts' per-share profit predictions in each of the past eight quarters, translating into an average one-week post-earnings gain of 6.2% for the stock. Nevertheless, options players have been upping the bearish ante of late. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AOL has racked up a 10-day put/call volume ratio of 1.22 -- in the 80th percentile of its annual range. In other words, option buyers have picked up AOL puts over calls at a faster-than-usual clip during the past couple of weeks. Likewise, seven out of 15 analysts maintain "hold" or worse opinions on the shares. Should the company once again blow earnings expectations out of the water, an unwinding of pessimism in the options pits and/or a round of upgrades could translate into added upside for AOL, which was last seen 1.6% higher at $44.24.

  • Keurig Green Mountain Inc (NASDAQ:GMCR) will unveil its fiscal second-quarter earnings after the close tomorrow. The company has been stellar under the earnings spotlight, beating bottom-line estimates in each of the past seven quarters. In fact, GMCR averages a one-week post-earnings gain of 22.5%, and soared 48.3% over the five sessions after its last earnings report. Short-term options speculators, meanwhile, haven't been more call-focused during the past year, as the stock's Schaeffer's put/call open interest ratio (SOIR) sits at an annual nadir of 1.10. However, some of the out-of-the-money calls could have been purchased by short sellers looking to hedge ahead of earnings; short interest accounts for 12.3% of GMCR's total float, representing more than a week's worth of pent-up buying demand, at the stock's average pace of trading. At last check, GMCR is 1.5% higher at $95.06.

  • Finally, Molycorp Inc (NYSE:MCP) will report first-quarter earnings after the close tomorrow. The firm has fallen short of analysts' per-share profit projections in four of the past eight quarters, resulting in an average one-week post-earnings deficit of 9.7%. Against this backdrop, short-term options traders are more put-focused than usual right now, as evidenced by the stock's SOIR of 1.47 -- which stands just 7 percentage points from a 12-month peak. Likewise, just one out of five analysts offers up a "strong buy" opinion of MCP, and 37.6% of the security's total float is dedicated to short interest. In fact, at the stock's average daily trading volume, it would take 19 sessions to buy back all of these bearish bets. In afternoon action, MCP is down 1.3% at $4.62.

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