Williams-Sonoma Stock Gears Up for Quarterly Earnings

The options pits lean firmly bearish, however

Digital Content Manager
Mar 15, 2022 at 3:00 PM
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Williams-Sonoma, Inc. (NYSE:WSM) is up 1.4% to trade at $146.65 this afternoon, one day ahead of its first-quarter earnings report, due out after tomorrow's close. The equity has struggled with pressure at its 50-day moving average since early December, after multiple bear gaps knocked it off a Nov. 22, record high $223.32. Year-to-date, WSM still carries a 13.1% deficit.

WSM 50 Day

The last time we checked on Williams-Sonoma stock, one analyst was predicting a strong 2022 for the kitchenware name. What's more, the equity has a positive history of post-earnings reactions, finishing five of eight next-day sessions higher over the past two years, including an 18.5% jump in March 2021. This time, options traders are pricing in a 12.8% swing for WSM, which is slightly higher than the 10.3% move it averaged following its last eight reports, regardless of direction. 

A broader look shows the brokerage bunch is mostly skeptical of WSM, with 11 of the 18 analysts in coverage carrying a tepid "hold" or worse rating. Plus, short interest accounts for 11.7% of the stock's available float, or more than one week's worth of pent-up buying power. In other words, if Wall Street likes the retailer's results, there's a lot of pessimism from analysts and short sellers that could be unwound.

The options pits echo that bearish sentiment.  At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WSM's 10-day put/call volume ratio of 15.39 sits higher than all readings from the past year. This indicates puts have been picked up at a much quicker-than-usual clip in the last two weeks. 


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