Walmart Holding Steady Despite Lackluster Earnings

Walmart's earnings and revenue missed expectations

by Patrick Martin

Published on Feb 18, 2020 at 10:39 AM

Blue chip Walmart Inc (NYSE:WMT) stepped into the earnings confessional this morning, and the results left a lot to be desired. The retail giant reported adjusted fourth-quarter earnings of $1.38 per share on $141.67 billion in revenue, both of which fell short of estimates. Walmart's full-year forecast also missed the mark, citing an upcoming stagnation of e-commerce growth. However, CFO Brett Biggs also noted that the coronavirus outbreak could have an impact impact first quarter margins.

Despite all of that, Walmart stock is up 0.6% to trade at $118.62, on track for its highest close in over a month. The shares have spent the last month consolidating below the $118 level, with their 200-day moving average underneath as support. WMT is still trading directly below its year-to-date breakeven level, but is now up 19% in the last 12 months.

Calls have held the advantage lately. WMT sports a 50-day call/put volume ratio of 2.61 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ranks in the elevated 76th percentile of its annual range, meaning calls have been purchased over puts at a faster-than-usual clip over the past 10 weeks.

Options traders are reacting to today's report. Already, more than 33,000 options have changed hands, seven times the average intraday amount and volume pacing for the 99th percentile of its annual range. Leading the charge is the February 110 put, but there are also new positions being opened at the February 119 put. 

However, those looking to buy premium on Walmart should note that the stock has actually been less volatile than expected in the past year, based on its Schaeffer's Volatility Scorecard (SVS) of just 18 (out of 100).

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