Earnings Preview: Monsanto, CarMax, Acuity Brands

Analyzing recent option activity on Monsanto Company (MON), CarMax, Inc (KMX), and Acuity Brands, Inc. (AYI)

Mar 31, 2015 at 12:56 PM
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Among the stocks gearing up to report earnings are agricultural specialist Monsanto Company (NYSE:MON), used car dealer CarMax, Inc (NYSE:KMX), and lighting solutions provider Acuity Brands, Inc. (NYSE:AYI). Below, we'll gauge the pre-earnings temperature of MON, KMX, and AYI.

  • MON has been a technical underperformer, with the shares down 5.4% year-to-date to linger near $112.97. What's more, Monsanto Company found itself in hot water last week after a troubling decision from the World Health Organization (WHO). Accordingly, sentiment in the options pits has been bearish, as MON's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.66 stands in the 98th percentile of its annual range. Meanwhile, in the session immediately following its last four earnings reports, MON has gained an average of 2.3%, including a 5.1% pop in June. Short-term options for the stock are available for relatively inflated premiums, as its Schaeffer's Volatility Index (SVI) of 23% is higher than 73% of all equivalent readings taken over the past year.

  • On the other hand, KMX has been a technical beast, with the shares notching a fresh all-time high of $69.52 earlier today, before cooling off a bit to $69.24 -- bringing its year-over-year gain to 45.8%. As such, call buying in the options pits has hit a yearly peak, as CarMax, Inc's 10-day ISE/CBOE/PHLX call/put volume ratio of 9.44 is the highest such reading taken over the past 12 months. KMX has been unpredictable in the earnings spotlight, with its last six quarterly reports sparking big one-day percentage moves -- ranging from a loss of 9.5% last September to a gain of 16.5% in June. Traders are paying middling prices for their short-term bets on the stock, as KMX's SVI of 42% ranks in the 52nd percentile of its annual range.

  • AYI has been trending higher as well, with the shares up 20.9% year-to-date to hit $169.28. Additionally, Acuity Brands, Inc. attained a new all-time high of $172.76 just yesterday. Puts have been popular in the options pits, as AYI's Schaeffer's put/call open interest ratio (SOIR) of 1.86 arrives in the 98th percentile of its annual range. Said another way, short-term speculators have rarely been this put-skewed on the security over the past 12 months. However, AYI doesn't usually drop after earnings; the stock has closed higher the day after seven of its last eight reports. Traders are paying fair prices for their near-term bets, as the security's SVI of 45% stands higher than 48% of all equivalent readings from the past year.

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