Macy's Stock Surges After Hiking Profit Guidance

The equity is pacing for its second-best day this year

Deputy Editor
May 26, 2022 at 10:21 AM
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Macy's Inc (NYSE:M) stepped into the earnings confessional this morning, where it reported better-then-expected first-quarter earnings of $1.08 per share on revenue of $5.35 billion. The department store chain noted shoppers were buying new outfits, luggage, and luxury goods, in spite of decades-high inflation, leading the company to reiterate its fiscal 2022 sales outlook and raise its profit guidance.

In response, M was last seen up 16% at $22.26. Should this momentum hold, it would mark the share's second-largest single day percentage gain of 2022. However, despite a 19.5% lead in the last 12 months, Macy's stock still has some ground to cover in order to overcome a 15.9% year-to-date deficit.

Analysts have yet to chime in, but bull notes could be on the way. Of the nine in coverage, just three say "strong buy," compared to six "hold" or worse ratings. Meanwhile, short sellers have been building positions, up 7.8% in the last two reporting periods, and an unwinding of this pessimism could put additional wind at the equity's back, as short interest makes up 12.8% of the stock's available float. 

A further shift in sentiment in the options pits could have bullish implications as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Macy's stock sports a 50-day put/call volume ratio that stands higher than 96% of readings from the past year. In other words, long puts have been picked up at a quicker-than-usual clip during the past 10 weeks. 

Today's trading has seen 13,000 calls and 13,000 puts exchange hands so far, with overall volume running at five times the intraday average. The most popular contract is the 5/27 22 call, followed by the 22.50 call in the same weekly series, with new positions being opened at the latter. 

 

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