Earnings Preview: Chevron Corporation, Exxon Mobil Corporation, and CVS Health Corp

Chevron Corporation (CVX), Exxon Mobil Corporation (XOM), and CVS Health Corp (CVS) will reveal quarterly results tomorrow morning

Oct 29, 2015 at 2:01 PM
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Alternative energy stocks will be in focus tonight, with these two companies slated to hit the earnings confessional. It's only a slightly different story tomorrow morning, as a pair of blue-chip oil names are scheduled to report, along with some other prominent companies. Specifically, energy giants Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) are slated to tell all bright and early, as is pharmacy chain CVS Health Corp (NYSE:CVS). Below, we'll take the pre-earnings temperature of CVX, XOM, and CVS.

  • Over the last eight quarters, CVX has averaged a single-session post-event move of 2.1%, with all but one to the downside. This time around, the options market is pricing in a slightly larger 2.7% swing, based on the stock's near-term at-the-money (ATM) straddle. It seems traders have been betting on Chevron Corporation to resolve to the downside, given that its 10-day put/call volume ratio of 1.55 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the top quartile of its annual range. This isn't at all surprising, considering CVX has lost one-fifth of its value in 2015 -- courtesy of tanking oil prices -- and was last seen at $89.72.

  • XOM has been better off than its sector peer this year, but not by much -- still off 11% at $82.25. Accordingly, the stock's 10-day ISE/CBOE/PHLX put/call volume ratio registers at a top-heavy 6.11, with more than six puts bought to open for every call. What's more, this reading ranks at the top of its annual range, meaning traders have shown an extreme preference toward bearish bets over bullish in recent weeks -- quite the change from how things were earlier this month. Ahead of tomorrow's earnings report, the options market is pricing in a nearly 3% swing for shares of Exxon Mobil Corporation, per near-term ATM straddle data. Historically speaking, the stock has averaged a move of just 2.1% in the session subsequent to the company's past eight quarterly reveals.

  • Unlike the two aforementioned stocks, CVS has had a solid year, rallying 8.6% to trade at $104.60 -- and recently surmounting its 200-day moving average, which acted as resistance for much of the past two months. Heading into earnings, shareholders are probably hoping CVS Health Corp doesn't repeat the woeful post-event performance of rival Walgreens Boots Alliance Inc (NASDAQ:WBA). Digging deeper, the equity's near-term ATM straddle is pricing in a 2.6% move -- bigger than the 1.6% swing CVS has averaged in the session after its past eight earnings reports. Shifting to sentiment, option traders have been betting against the stock in recent months, per its 50-day ISE/CBOE/PHLX put/call volume ratio of 1.27 -- which ranks just 13 percentage points from a 12-month high.
 

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