Checking in on Walmart Stock Ahead of Earnings

History shows that WMT is one of the worst stocks to own this month

Deputy Editor
Feb 15, 2022 at 1:24 PM
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Walmart Inc (NYSE:WMT) is gearing up for its fourth-quarter earnings report, due out before the open on Thursday, Feb. 17. When we last covered the blue-chip, big box retailer, we noted that it's one of the worst stocks to own in February. This seems to be an accurate assessment, as the stock has already shed 3.9% this month. Combine that with January's 3.4% dip and Walmart stock has started 2022 on a less-than-stellar note. WMT is marginally higher ahead of the event, however, last seen up 0.4% at $134.45, though it's still facing pressure from every several trendline on the charts. 

WMT Chart Feb 15

Options traders are pricing in a 5.7% swing for Walmart stock following the event, which is much higher than the average 2.2% move the stock has made after earnings over the past two years, regardless of direction. Digging deeper, the stock has seen mostly negative post-earnings reactions, moving higher in just two instances in the last eight quarters.

Options traders are more attracted to puts at the moment, according to Walmart stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 99th percentile of its annual range. This indicates a much stronger-than-usual preference for puts over the last two weeks.

Echoing this, short-term options traders have rarely been more put-biased in the past year. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) that stands in the elevated 95th percentile of its 12-month range.

 

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