Earnings Preview: Chipotle Mexican Grill, Inc., Yahoo! Inc., and VMware, Inc.

Chipotle Mexican Grill, Inc. (CMG), Yahoo! Inc. (YHOO), and VMware, Inc. (VMW) are preparing to report earnings tomorrow night

Oct 19, 2015 at 2:24 PM
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Earnings season is accelerating this week, with a number of notable companies reporting early on -- including this morning's results from Morgan Stanley (NYSE:MS) and Hasbro, Inc. (NASDAQ:HAS). Among the firms slated to step into the confessional tomorrow evening are burrito baron Chipotle Mexican Grill, Inc. (NYSE:CMG), Internet issue Yahoo! Inc. (NASDAQ:YHOO), and virtualization specialist VMware, Inc. (NYSE:VMW). Below, we'll take the pre-earnings temperature of CMG, YHOO, and VMW.

  • CMG is off 1% this afternoon at $715.39, trimming its year-to-date lead to 4.5%. In recent months, the shares have been chopping up and down in the $700-$760 range, with the stock's 80-day moving average finally catching up this afternoon. It appears option traders are counting on the equity to break south following earnings, based on CMG's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.31 -- just 11 percentage points from a 12-month high. Speaking of tomorrow night's event, the options market is currently pricing in a post-earnings move of 7.3% in either direction, based on near-term at-the-money (ATM) straddle data. This is actually less than Chipotle Mexican Grill, Inc.'s average swing of 9.3%, in the immediate aftermath of the company's last eight reports.

  • Meanwhile, the options market is pricing in a 5.8% move for YHOO following the firm's earnings report, based on its near-term ATM straddle. This is larger than the stock's typical single-day post-earnings swing of 3.9%, following its previous eight turns in the spotlight. Based on data at the ISE, CBOE, and PHLX, speculators are rolling the dice on post-event losses for Yahoo! Inc. The security's 10-day put/call volume ratio of 1.06 rests a mere 2 percentage points from an annual high, meaning traders have bought to open puts over calls at much faster-than-usual clip during the past two weeks. Despite boasting a month-to-date gain of more than 15.5%, YHOO ihas lost over one-third of its value in 2015 to trade at $33.40. Today, the shares are little changed, despite the noteworthy departure of one senior executive.

  • Lastly, option bulls have been swarming VMW ahead of earnings, based on its 50-day ISE/CBOE/PHLX call/put volume ratio of 3.08 -- outranking 83% of comparable readings from the past year. In terms of expectations for tomorrow night, the stock's near-term ATM straddle is pricing in a roughly 5% swing following VMware, Inc.'s report -- roughly in line with its historical single-session post-earnings average, looking back eight quarters. On the charts, the shares have struggled mightily since gapping lower on Oct. 12 following the sale of VMW's parent company -- en route to a two-year low of $67.48 last Wednesday. At present, VMW is sitting on a year-to-date deficit of 16.6% to trade at $68.86.

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