Amid a raft of positive earnings reports, retail stocks Kohl's Corporation (KSS), Nordstrom, Inc. (JWN), and Ralph Lauren Corp (RL) have caught fire
As the broader market continues to run higher on the U.S. presidential election results, retail stocks are
rallying on earnings. Among the outperformers are
Kohl's Corporation (NYSE:KSS),
Nordstrom, Inc. (NYSE:JWN), and
Ralph Lauren Corp (NYSE:RL). Below, we'll take a closer look at the pertinent earnings results, and how each stock's gains may be impacting options traders.
KSS has rocketed to a 13.7% gain at $51.98, with the retailer's adjusted per-share earnings of 80 cents topping the consensus estimate of 70 cents -- boosted by a
strong back-to-school season. In fact, the stock earlier hit an annual high of $52.28.
This probably isn't sitting well with Kohl's Corporation options traders. The retail stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at a top-heavy 1.90, only 14 percentage points from an annual high. If the weaker bearish hands start to throw in the towel, KSS shares could catch a tailwind.
It's a similar story for JWN. While the department store chain didn't report earnings yet, its stock is up 8.5% at $56.75 on retail sector tailwinds. Of course, that doesn't mean the Street will have to wait long to get a look at Nordstrom's quarterly performance. The company will tell all after the close, and hopes to duplicate its post-earnings performance from August -- an 8% gap higher.
A repeat performance would crush option bears, of which there are many. Specifically, traders have bought to open 6.25 Nordstrom, Inc. puts for every call during the last two weeks -- a ratio ranking in the 96th annual percentile. Elsewhere, nearly 29% of the stock's float is sold short, which would take about 13 sessions to cover, at JWN's average daily volume. In other words, there is plenty of pent-up pessimism to potentially push the shares higher on a positive earnings surprise.
Rounding things out, RL has jumped 2.5% at $104.67 on earnings. The designer notched an adjusted per-share profit of $1.90 for the fiscal second quarter, easily outstripping the consensus estimate of $1.71. Despite today's pop on the charts, the stock still sits on a year-to-date deficit of more than 6%.
Unlike the options traders described above, Ralph Lauren Corp speculators have actually taken a more bullish path. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio stands at 1.33, with long calls edging out puts. However, with nearly one-tenth of RL's float sold short, it may be that these call buyers are simply shorts hedging against a unforeseen rally -- like the one we're witnessing today.
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