Earnings Preview: Adobe Systems Incorporated, Bob Evans Farms, Inc., and FedEx Corporation

Analyzing recent option activity ahead of earnings from Adobe Systems Incorporated (NASDAQ:ADBE), Bob Evans Farms Inc (NASDAQ:BOBE), and FedEx Corporation (NYSE:FDX)

by Josh Selway

Published on Jun 16, 2015 at 12:32 PM
Updated on Jun 16, 2015 at 12:36 PM

Among the stocks preparing to unveil earnings are software concern Adobe Systems Incorporated (NASDAQ:ADBE), breakfast baron Bob Evans Farms Inc (NASDAQ:BOBE), and package maven FedEx Corporation (NYSE:FDX). Below, we'll take the pre-earnings temperature of ADBE, BOBE, and FDX.

  • ADBE has generally been strong following its earnings reports in the past, posting positive post-earnings sessions after five of its last eight reports. When the company reported in mid-March, though, the stock gave back 3.5% in the subsequent session. Ahead of the firm's earnings release this evening, the options market is pricing in a 5.6% swing for Adobe Systems Incorporated, based on straddle data. Traders have been turning bearish ahead of the event. For one, ADBE's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 1.37, higher than 82% of readings from the past year. Plus, short interest increased over 31% during the most recent two-week reporting period. All of this comes despite the security's 9.8% year-to-date rise to hover near $79.81 -- within striking distance of its late-May all-time peak of $80.74.

  • BOBE's fiscal fourth-quarter numbers will be released after the close today, and shareholders are hoping things go better than the last two times the company reported, when shares dropped a respective 22.3% and 14.1% in the subsequent session. This time around, the options market is pricing in an 8.9% post-earnings swing -- relatively in line with the stock's historical moves. Also, Bob Evans Farms, Inc.'s short-term options are trading at relatively normal prices ahead of the event, from a volatility perspective. This, according to BOBE's Schaeffer's Volatility Index (SVI) of 40%, which lands in the middling 49th percentile of its annual range. At last check, the stock is 0.1% lower at $47.79.

  • From a long-term technical outlook, FDX has been strong, adding almost 30% year-over-year to trade at $181.85 -- and approaching last week's record high of $185.19. Option traders expect more gains in the near term, as call buying has been popular ahead of the company's fiscal fourth-quarter earnings release, scheduled for tomorrow morning. FedEx Corporation's 10-day ISE/CBOE/PHLX call/put volume ratio has jumped to 1.54 from 0.49 since the start of June -- which ranks in the 69th annual percentile. The market is expecting a 3.1% end-of-week swing after FDX reports, which is more or less in line with its recent post-earnings performances. That is, it's averaged a 2.7% single-session move following its last eight earnings releases. 

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