Electronics Retailers Step In the Earnings Confessional
By Beth Gaston (bgaston@sir-inc.com)
4/1/2002 11:26 AM ET
Best Buy (BBY – 78.04) and Circuit City (CC – 17.47) battle it out to be the country's leading electronics retailer. Currently, BBY leads the market in terms of sales, although CC boasts more store locations.
Both firms are slated to announce full-year earnings during tomorrow's activity. Analysts expect BBY to have collected $1.61 for the year. Over the past four quarters, BBY has managed to exceed Street estimates, at least by a penny per share. CC has also consistently issued positive earnings surprises for the past four earnings periods. Wall Street pundits are expecting CC to have collected 73 cents per share throughout the year.
Since late September, BBY has practically doubled in value, enjoying the nearly constant support of its 10-day and 20-day moving averages. After spending several weeks hovering just below the 75 mark, BBY made a recent drive higher to overcome this bulwark of resistance. The shares are now consolidating around the 80 mark. This sideways trend has caused the shares to breach their 10-day trendline.
Additionally, the 80 level has been critical in rebuffing the security's advances over the past 18 months. BBY's rallies were thwarted in this region in July 1999 and September 2000.
Between February 12 and 22, CC shares relinquished 46 percent of their value amid reports of lagging quarterly earnings and sales. The security has since failed to pare these losses. Additionally, CC is encountering resistance in the form of its newly descending 10-day and 20-day moving averages.
Speculators have been fairly optimistic on both retailing names. Schaeffer's put/call open interest ratio (SOIR) for BBY has been declining since early February and currently weighs in at 0.60, ranking in the fourth percentile of all annual readings. As for CC, its SOIR stands at 0.33, which is in the lowest 28 percent of all SOIR numbers captured over the past 12 months. Aside from a handful of front-month calls on both securities, options activity is relatively muted so far in today's activity.
- Beth Gaston (bgaston@sir-inc.com)
[Harry: If they miss then this may pressure ESST.]
Sector Siesta for Monday – Spotlight on Retailers
By Rick Pendergraft (rpendergraft@sir-inc.com)
4/1/2002 12:41 PM ET
The S&P Retail Sector (RLX- 934.1) is down 2.12 percent ahead of tomorrow's earnings announcements from Best Buy (BBY- 78.80) and Circuit City (CC- 17.79). The RLX has been in an uptrend since bottoming at 670.8 back in September to a high of 980.6 in last week's trading; a 46 percent move in just over six months. The retail sector has been viewed as the one of the biggest signs of continued consumer confidence during this economic downturn. The composite put/call ratio has been trending higher with the RLX, but has been wavering of late. The ratio reached a high of 0.89 at the end of February, but then dropped to a 0.69 reading after the March option expiration. The put/call ratio has moved back up to its current reading of 0.76. The earnings announcements tomorrow could have a huge impact on the market as a whole, as they will reflect how consumers are dealing with the economic picture. |
