BIG Brushes Off Earnings Beat on Dismal Q2 Forecast

The security still sports an over 61% year-over-year lead, though

Assistant Editor
May 28, 2021 at 11:07 AM
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Big Lots, Inc. (NYSE:BIG) stepped into the earnings confessional this morning to report first-quarter earnings of $2.62 per share -- well above Wall Street's estimates. Revenue, meanwhile, was in line with expectations, as comparable-store sales rose 11.3%, driven by strong demand for furniture and food. Still, BIG was last seen down 7.9% at $59.40, after the company forecast a low double-digit decline in second-quarter comparable sales.

This negative price action has placed shares under the $60 mark for the first time since early March. Plus, the security is slipping below the 100-day moving average, which has acted as support for most of 2021. However, Big Lots stock is fresh off a March 22 all-time high of $72.27, and still sports a 61.7% year-over-year lead.

The security looks ripe for a short squeeze, too, which would push shares higher. Short interest saw a 9.3% jump over the last two reporting periods, and the 4.49 million shares sold short now make up a whopping 13.7% of the stock's available float. In other words, it would take six days to buy back these bearish bets, at BIG's average pace of daily trading.

Big Lots stock could also benefit from a shift in the options pits. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.09 stands higher than 88% of readings from the past year. In other words, short-term option traders have rarely been more put biased towards BIG.

Drilling down to today's options activity, 2,756 calls have already crossed the tape, which is nine times what is typically seen at this point. Most popular is the monthly June 65 call, followed by the July 60 call, with new positions currently being opened at the latter.

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