Big-name retailers are filing into the earnings confessional this week, with investors keen to see how consumer spending is looking. Today's buzz is coming from Lowe's Companies Inc (NYSE:LOW) and Target Corp (NYSE:TGT). Below we'll take a close look at how LOW and TGT are faring.
Behind the Lowe's Stock Breakout
LOW is moving 2.6% higher to trade at $263.09 this morning, after adjusted second-quarter earnings topped estimates at $4.33 per share. While Lowe's missed revenue estimates on a reading of $23.96 billion, the company also hiked its annual sales forecast and plans to buy competitor Foundation Building Materials for $8.8 billion. Today's pop has pushed LOW to trade at nearly seven month highs and comfortably in the black year-to-date.
In the two weeks before the company's report, options traders have been buying puts. This is per LOW's 10-day put/call volume ratio of 1.79 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 92nd percentile of readings from the past 12 months.
Today, calls have the edge. At last check, over 7,000 calls have changed hands, volume that's five times the average intraday amount. The weekly 8/22 270 call is the most popular, with new positions being sold to open.
Target Eyes Worst Day in Months
On the flip side, TGT is off 9.6% to trade at $95.27, after the company posted an adjusted second-quarter earnings miss of $2.05 per share, while news its CEO Brian Cornell will be replaced by Michael Fiddelke overshadowing a revenue beat. The $110 area has capped any breakout attempts the past few months, but with today's pullback the equity is eying its worst daily drop since April and its lowest close since late June.
Puts have also been popular for TGT options buyers, with the equity's 10-day put/call volume ratio of 1.01 ranks in the 83rd annual percentile at the ISE/CBOE/PHLX. And similar to its sector peer, calls are in the lead today, with 89,000 contracts changing hands already, volume that's 10 times the average intraday amount. The weekly 8/22 100- and 110-strikes are the most popular, with new positions being bought to open at the former.
