Weed Stock Burning Down After Earnings

Dillard's same-store sales topped estimates

Managing Editor
Nov 14, 2019 at 3:02 PM
facebook twitter linkedin


Stocks are trending lower today, as Wall Street weighs blue-chip earnings amid growing U.S.-China trade uncertainty. Among three names making notable moves today are cannabis concern Canopy Growth Corp (NYSE:CGC), coal stock Contura Energy Inc (NYSE:CTRA), and retailer Dillard's, Inc. (NYSE:DDS). Here's a quick look at what's moving the shares of CGC, CTRA, and DDS.   

CGC Falls On Q4 Revenue Warning

Canopy Growth stock is down 15.4% to trade at $15.65, and earlier hit a record low of $15.19. The company's third-quarter loss was sharper than expected, although revenue topped estimates. In addition, Canopy Growth said it's "increasingly unlikely" its current-quarter revenue goals are hit. CGC is heading for its worst day since November 2016, and has now shed 42% year-to-date.

With the stock on the short-sale restricted list, options traders have taken the wheel. At last check, 66,000 puts have changed hands, six times the average intraday amount and volume already at a new annual high. Calls are popular, too, with the November 15.50 and 16 calls CGC's most active options today.

Downtrodden Coal Stock At Risk For Downgrades

At the bottom of the New York Stock Exchange (NYSE) sits Contura Energy stock, last seen down 44.6% to trade at $10.11, having earlier scraped a new bottom of $10.00. Thanks to a soft coal market, the company reported an unexpected third-quarter loss, and Contura had to reduce its shipments forecast for 2019. It's shaping up to be CTRA's biggest one-day percentage drop ever by a wide margin, and brings its year-over-year haircut now to 86%.

Despite this freefall, analysts are sticking with CTRA. All three brokerages in coverage rate it a "strong buy," while the consensus 12-month price target of $37 is now a 270% premium to its current perch.

DDS Options Bears Skeptical Despite Earnings Beat

A big earnings winner today is Dillard's, up 14.3% to trade at $77.53. Not only were third-quarter earnings above analysts' estimates, same-store sales topped expectations, as well. CEO William Dillard called the results a "substantial improvement over the second quarter," and CFRA chimed in by hiking its price target to $43 from $38. DDS traded as high as $84.47 today -- and thanks to newfound support at its 200-day moving average -- and is now up 28.1% year-to-date.

Options traders aren't convinced, though. Nearly 6,900 options have changed hands, 18 times the average intraday amount, and 15 times the average daily volume. Leading the charge are the December 70 and 65 puts, where new positions are being opened. Those buying the puts are banking on a pullback from DDS by the close on Friday, Dec. 20, when the options expire.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners