Kroger Slumps on Weak Guidance, While Jabil Pulls Back Post-Earnings

Wells Fargo is in legal trouble, while Jabil earnings get a chilly reception from traders

Managing Editor
Jun 15, 2017 at 10:54 AM
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U.S. stocks are down, as two key sectors fall back. Among specific names on the move today are grocery giant Kroger Co (NYSE:KR), Apple supplier Jabil Circuit, Inc. (NYSE:JBL), and banking concern Wells Fargo & Co (NYSE:WFC). Here's a quick look at what's moving shares of KR, JBL, and WFC.

Earnings Drop Sends Kroger Shares Tumbling

Kroger stock is plummeting today, down 13% at $26.29 -- a new two-and-a-half-year low -- after the company slashed its full-year profit forecast to a range between $2.00 and $2.05 per share, well below the average analyst estimate of $2.19. It's been a tough year for KR, which is down nearly 24% year-to-date, and hit its previous annual low of $28.29 on March 14 (the date of its last earnings report).

Short interest in KR shares grew by 22% during the last reporting period, and now accounts for nearly 23 million shares -- the highest accumulation of bearish bets since last September. Analysts are primarily optimistic, however. Nine out of 15 brokerages covering KR stock rate it a "buy" or better.

Jabil Stock Exceeds Earnings Expectations

Jabil stock is trading lower today, down 2.3% at $29.95, despite its earnings release beating expectations. Stifel, RBC, and Deutsche Bank all raised their price targets on the news, but traders seem unimpressed, with the stock's pre-market gains evaporating at the open. JBL stock hit an 11-year high of $31.70 last Friday, but is now struggling to keep its footing above the round $30 level -- site of its late-May highs.

Options traders appeared to be bracing for a possible post-earnings downturn from Jabil shares. JBL sports a Schaeffer's put/call open interest ratio (SOIR) of 0.74, which ranks in the 70th annual percentile -- indicating a higher-than-average level of puts relative to calls among short-term options.

Wells Fargo in Legal Cross-Hairs Over Mortgage Scandal

Wells Fargo stock is down just 0.4% at $54.29, despite reports that the lender made unauthorized changes to home loans. WFC hit an all-time high of $59.99 on March 1, but has retreated some 9.5% in the intervening months. The stock has now been stuck below its year-to-date breakeven mark, at $55.11, for the bulk of the last two months.

Option traders and analysts alike are cautious over WFC stock. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows WFC stock with a 10-day put/call volume ratio of 1.16, which ranks in the 85th percentile of its annual range. Analysts echo this bearish sentiment as well, with over half of brokerage firms rating WFC shares a "hold" or "sell."


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