Schaeffer's Trading Floor Blog

Earnings on Deck: Best Buy Co Inc, GameStop Corp., and Marvell Technology Group Ltd.

Previewing BBY, GME, and MRVL ahead of their upcoming earnings reports

by 5/21/2014 1:34 PM
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Although we're on the tail end of earnings season, a slew of noteworthy names are still waiting in the wings. Among the companies scheduled to report tomorrow are electronics retailer Best Buy Co Inc (NYSE:BBY), video game merchandiser GameStop Corp. (NYSE:GME), and semiconductor concern Marvell Technology Group Ltd. (NASDAQ:MRVL). Here's a quick look at these names as earnings approach.

  • Best Buy Co Inc (NYSE:BBY) will report first-quarter earnings before the open tomorrow. The company has topped the Street's per-share profit predictions in six of the past eight quarters, yet the stock averages a one-day post-earnings loss of 1.4%. Nevertheless, Wall Street remains upbeat toward BBY, with 12 out of 18 analysts offering up "buy" or better endorsements. Meanwhile, the stock's 10-day call/put volume ratio of 1.57 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 64% of all other readings from the past year, pointing to a healthier-than-usual appetite for bullish bets over bearish during the past two weeks (though some of this may be at the hands of short sellers -- over 10% of the equity's float is sold short). At last check, BBY was fractionally higher at $24.98, but remains 37.4% lower year-to-date. Should the retailer report lackluster earnings tomorrow, a wave of downgrades and/or a mass exodus of option bulls could exacerbate selling pressure on the shares.

  • GameStop Corp. (NYSE:GME) will unveil its first-quarter figures after the close tomorrow. The firm has exceeded analysts' bottom-line estimates in six of the past seven quarters, translating into a one-week post-earnings gain of 5.5%, on average, for GME. While analysts are optimistic -- 10 out of 15 rate the stock a "buy" or better -- options traders have been upping the bearish ante. The security's 10-day ISE/CBOE/PHLX put/call volume ratio of 4.76 sits just 4 percentage points from an annual peak, and its Schaeffer's put/call open interest ratio (SOIR) of 3.16 sits higher than 99% of all comparable readings from the past year. Meanwhile, short interest accounts for more than a quarter of GME's total available float, and would take nearly 14 sessions to buy back, at the stock's average pace of trading. In afternoon action, GME has added 1.8%, but remains 24.7% lower for 2014.

  • Finally, Marvell Technology Group Ltd. (NASDAQ:MRVL) will report first-quarter earnings post-close tomorrow. The company has matched or surpassed the Street's per-share predictions in six of the past seven quarters, yet the stock averages a one-week post-earnings drop of 1.9%. Heading into tomorrow's report, short-term options players are more call-biased than usual, as the stock's SOIR of 0.71 stands higher than just 39% of all other readings from the past year. However, it's worth noting that short interest on MRVL jumped 23.4% during the most recent reporting period, suggesting the recent crop of bears could be purchasing short-term calls to hedge against a post-earnings rally. At last look, MRVL was 1.2% higher to wink at $15.46, bringing its year-to-date gain to 7.5%.
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