Can Earnings Help This Sporting Goods Stock Recover?

DKS has a history of moving higher after earnings

Deputy Editor
Mar 7, 2022 at 1:15 PM
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Dick's Sporting Goods Inc (NYSE:DKS) stock was last seen down 5.7% to trade at $103.46 this afternoon, and adding to its nearly 10% year-to-date deficit. Today's negative price action has Dick's Sporting Goods stock extending its mark below the formerly supportive 200-day moving average. And while February saw DKS lock in its worst month since September, the company will report fourth-quarter financial results before the open tomorrow, March 8, inspiring confidence that the shares could be on the mend soon.

DKS Chart March 7

Looking at Dick's Sporting Goods stock's earnings history, the shares have moved higher in six out of the last eight post-earnings sessions, going back two years. The shares averaged an 8%  pop the day after earnings, regardless of direction. This time around, the options market is pricing in a much larger 18.8% move for tomorrow's trading. A move of the latter's magnitude would put the shares back on track to reclaiming their Nov. 22 all-time high of $142.78.

A shift in the options pits could provide serious tailwinds for DKS. This is per the stock's 50-day put/call volume ratio of1.02 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 84% of readings from the past year. This means that long puts have been getting picked up at a quicker-than-usual clip in the last 10 weeks.

A short squeeze could also provide more fuel for the stock's fire. Short interest increased by 15.1% in the most recent reporting period. However, these bearish bets still represent a hefty 22.3% of the stock's total available float, and more than six days of pent-up buying power, at the security's average pace of trading. 

 

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