Earnings On Deck: J C Penney Company Inc, Macy's, Inc., and Kohl's Corporation

JCP, M, and KSS will take their turns in the earnings confessional this

Nov 11, 2014 at 11:09 AM
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It's a big week for retailers, with monthly sales figures due out on Friday, and a number of notable names headed to the earnings confessional. Included in the bunch are J C Penney Company Inc (NYSE:JCP), Macy's, Inc. (NYSE:M), and Kohl's Corporation (NYSE:KSS).

  • J C Penney Company Inc (NYSE:JCP) will head into the earnings confessional after tomorrow's close, and skepticism has been building ahead of the scheduled event. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 50-day put/call volume ratio of 0.83 ranks in the bearishly skewed 79th percentile of its annual range. Elsewhere on the Street, short interest jumped nearly 10% in the latest reporting period, and now accounts for more than one-third of JCP's available float. It's a trend witnessed among the brokerage bunch, as well, with roughly 88% of those covering the shares maintaining a "hold" or "strong sell" suggestion." Today, the shares are 0.3% lower to trade at $7.20, extending their year-to-date deficit to 21.3%.

  • Macy's, Inc. (NYSE:M), meanwhile, is slightly lower ahead of tomorrow morning's quarterly earnings report, with the shares down 0.2% at $59.13. The stock has enjoyed a long-term lift from its 320-day moving average -- dating back to late-July 2009 -- and thanks to a sharp bounce off this historically supportive trendline in October 2013, M has rallied roughly 40%. Option traders have taken the glass-half-empty approach of late, though, as evidenced by the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.38, which ranks in the 77th percentile of its annual range. As such, M's Schaeffer's put/call open interest ratio (SOIR) of 1.46 ranks just 4 percentage points from a 52-week peak, meaning short-term speculators have rarely been as put-heavy toward M as they are now. For Macy's third-quarter, Wall Street is calling for a per-share profit of 50 cents.

  • Since May 2013, Kohl's Corporation (NYSE:KSS) has tacked on nearly 21% to trade at $56.21, thanks to steady layer of support from its 20-month moving average. More recently, the equity is up almost 4% month-to-date. After KSS steps up to the earnings plate ahead of Thursday's open, the options market is pricing in a post-earnings single-session move of 5.2%. However, with implied volatility on the November 57.50 put and call running neck-and-neck (35% vs. 35.1%), it's a toss of the coin as to which direction this price action is expected to resolve. A move to the upside has the potential to prompt a short-covering rally, which could translate into additional gains for the shares. At present, 12.7% of the stock's float is sold short, and would take nearly seven sessions to cover, at the stock's average daily pace of trading.

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