Earnings Roundup: First Data Corp and Xerox Corp

First Data Corp (FDC) and Xerox Corp (XRX) are making big moves after reporting earnings

by Alex Eppstein

Published on Apr 25, 2016 at 10:14 AM
Updated on Jun 24, 2020 at 10:16 AM

This week is chock-full of earnings reports, including highly anticipated quarterly numbers from Apple Inc. (NASDAQ:AAPL). A number of companies have already reported earnings this morning, and we'll be looking at two -- payment solutions specialist First Data Corp (NYSE:FDC) and copy concern Xerox Corp (NYSE:XRX). Not only will we review the firms' respective earnings results, but also the sentiment landscape in the options pits and beyond.

FDC reported adjusted per-share earnings of 24 cents for its first quarter, edging past the consensus view of 23 cents per share. Revenue, meanwhile, arrived at $2.8 billion -- well above the expected $1.7 billion. As a result, the stock is 5.7% higher at $13.74. Longer term, the shares have been consolidating  just above $13 for the past two weeks, and appear to have found a foothold atop their 80-day moving average.

Bearish betting has been rampant among options traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 11.70 FDC puts for every call during the last 10 sessions. As such, the stock's Schaeffer's put/call open interest ratio (SOIR) checks in at a top-heavy 3.96 -- indicating short-term put open interest nearly quadruples call open interest.

On the flip side, analysts have taken a glass-half-full approach toward First Data Corp. Eleven of 14 consider the stock worthy of a "buy" or better rating, with not a single "sell" opinion to be found. Plus, FDC's consensus 12-month price target of $15.91 stands at a 16% premium to current trading levels, and represents territory not charted since early January.

Shifting our focus to XRX, the company reported adjusted earnings 22 cents per share in the first quarter -- a penny below the Street's consensus estimate. The firm's revenue also fell 4.2% year-over-year due to lower printer sales and a stronger dollar -- although the $4.28 billion reported beat the average forecast. This morning, the stock has plunged about 11.5% to trade at $9.88, and is currently testing its 100-day trendline for the first time since early March.

At the ISE, CBOE, and PHLX, options traders have bought to open an astounding 12.17 calls for every put during the last four weeks, although this call-skewed backdrop is amid relatively low absolute volume. On the other hand, two-thirds of analysts consider Xerox Corp a "hold" or worse.

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