Earnings on Deck: The Coca-Cola Company, McDonald's Corporation, and United Technologies Corporation

KO, MCD, and UTX will unveil their third-quarter results ahead of tomorrow's open

by Karee Venema

Published on Oct 20, 2014 at 11:17 AM
Updated on Apr 20, 2015 at 5:32 PM

International Business Machines Corp. (NYSE:IBM) kicked off a week chock-full of blue-chip earnings with a miss this morning, and tomorrow, fellow Dow components The Coca-Cola Company (NYSE:KO), McDonald's Corporation (NYSE:MCD), and United Technologies Corporation (NYSE:UTX) will take their respective turns on stage ahead of the open. Here's a quick look at KO, MCD, and UTX before they release their third-quarter earnings results.

  • Following the release of its second-quarter earnings report in late July, beverage giant KO went on to shed 2.9% in the subsequent session. However, the shares rebounded over the next several months, and tagged a record high of $44.87 on Oct. 10. More recently, The Coca-Cola Company was seen lingering near $43.29, but option traders have been bearishly aligning themselves in the months leading up to tomorrow's scheduled announcement. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.58 ranks in 67th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip. In the front-month series, specifically, peak put open interest is found at the near-the-money November 43 strike, where the majority of the 9,112 contracts currently in residence have been bought to open.

  • MCD took a tumble after unveiling its second-quarter earnings results in mid-July, shedding 1.3% in the subsequent session. Option traders are expecting more of the same for the fast-food concern, and over the past 10 sessions, have bought to open 1.40 MCD puts for each call at the ISE, CBOE, and PHLX. What's more, this ratio ranks just 8 percentage points from a 52-week peak. This skepticism is witnessed elsewhere on the Street, as well. Specifically, 14 out of 20 covering analysts maintain a "hold" or "sell" suggestion toward McDonald's Corporation, and the consensus 12-month price target of $98.35 stands at a slim 7.7% premium to the equity's current perch at $91.35.

  • UTX also experienced a post-earnings move to the downside after reporting in mid-July, surrendering 1.9% in the session immediately following the release of its results. Longer term, the aerospace issue has given back 16% since hitting a record high of $120.66 in late April to trade at $101.25, but seems to have found a foothold atop the century mark -- a level that coincides with peak put open interest in the front-month series. Widening the sentiment scope reveals UTX speculators have shown a preference for puts over calls among options slated to expire in three months or less. In fact, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.92 ranks higher than 73% of comparable readings taken in the past year, suggesting short-term speculators are more put-heavy than usual toward United Technologies Corporation.

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