Pier 1 Imports Stock Tries to Break Ugly Earnings Streak

Despite light volumes, options traders have been call-heavy toward the stock of late

Emma Duncan
Jun 26, 2018 at 12:22 PM
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Pier 1 Imports Inc (NYSE:PIR) is slated to report first-quarter earnings after the market closes tomorrow. PIR stock is trading up 0.2% at $2.97 at last check, back below the 120-moving average, which has contained breakout attempts from the shares since December. The stock has, however, gained 37% since its mid-May eight-year low of $2.15. 

Daily Chart of PIR with 120 MA

Digging into earnings history, over the past eight quarters PIR stock has closed lower the day after the company reports in all but two quarters -- including the last five in a row. On average, the shares have swung 14.6% in the subsequent session over this two-year time frame, regardless of direction. This time around, the options market is pricing in a 17.5% next-day move for Thursday's trading.

Although it's come amid overall light volume, call buying has been the popular strategy toward PIR recently, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing the retailer with a 10-day call/put volume ratio of 2.40, ranking in the 81st percentile of its annual range. In other words, calls have been purchased over puts at a faster-than-usual clip during the past two weeks.

On the flip side, analyst attention has not been so optimistic towards Pier 1 Imports stock. All seven brokerage firms following the stock sport "hold" or "strong sell" ratings. Further, PIR's average 12-month price target of $2.63 sits at a 9.6% deficit to current trading levels.

Lastly, short interest on PIR rose 8% during the most recent reporting period, and currently accounts for 15% of the stock's total available float. At Pier 1 stock's average daily trading volume, it would take more than eight days for shorts to cover their bearish bets.

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