2 Retail Stocks Heading in Opposite Directions After Earnings

Reuters is reporting a deal is close between Sprint and T-Mobile

Sep 22, 2017 at 9:27 AM
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Dow futures are signaling a lower open due to renewed fears surrounding North Korea. Among specific stocks in focus today are used car retailer CarMax, Inc (NYSE:KMX), athletic apparel retailer Finish Line Inc (NASDAQ:FINL), and telecom stock Sprint Corp (NYSE:S). Here's a closer look at what's moving shares of KMX, FINL, and S. 

KMX Stock Rises After Earnings Beat

CarMax stock is up 2.7% in pre-market trading, after the company's better-than-expected fiscal second-quarter earnings report. The shares just hit a two-year high of $69.98 yesterday before closing at $68.84, up 26% year-over-year. 

Despite this promising performance on the charts, many analysts have remained bearish. At the moment, half the brokerage firms covering KMX rate it a "hold" or "strong sell," and the shares are now trading in line with their average 12-month price target. As such, today's post-earnings pop could result in a round of bullish analyst attention. 

Short Sellers Cheer Disappointing Finish Line Earnings

Finish Line stock has shed 9.4% in electronic trading, due to lackluster fiscal second-quarter earnings. As of their close at $9.22 yesterday, the shares had already dropped more than half their value in 2017, hitting an eight-year low of $6.90 in late August. 

Short sellers would love for this price action to continue. These bearish bets increased by almost 16% over the last two reporting periods, and the 11.8 million FINL shares now sold short are the most since at least 2002. If the company's disappointing quarterly report induces short sellers to double down on the retailer, more losses could be in store. 

Sprint Stock in Focus as T-Mobile Talks Heat Up

Shares of Sprint are up 3.6% in pre-market trading, after Reuters reported the company is closing in on a merger with T-Mobile. The stock rallied a few days back on similar speculation, but subsequently cooled to close yesterday at $8.03, putting it below its year-to-date breakeven point. 

In the options pits, traders have been focusing on call buying. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call open interest ratio of 10.11, which ranks in the 94th annual percentile. 

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