M achieved better than expected earnings and sales than expected in the first quarter
The shares of Macy’s Inc. (NYSE: M) are up 1.7% this morning to trade at $ 19.49 after the massive retailer posted 39 cents a share in earnings – much higher than Wall Street’s estimated losses of 41 cents a share – as well reported a drop in sales. In addition, the department store has raised its annual sales and profit forecasts and expects strong demand as vaccinated shoppers return to stores to purchase luxury items like fragrances, fine jewelry and watches.
The stock has experienced a fair amount of volatility over the past few months. After a large bull gap on Jan. 27 pushed stocks to a two-year high of $ 22.29, the stock fell back to $ 13. However, stocks climbed back above the $ 21 level in mid-March and only broke the overhead pressures at $ 18.50 yesterday with the support of the 100-day moving average. In a year-on-year comparison, M is a full 253.5% ahead.
Analysts are still overwhelmingly pessimistic about the stock, with seven of the eight in question having a lukewarm “hold” or lower rating, while only one said “strong buy”. Additionally, the 12-month consensus target of $ 13.65 means a 28.8% discount from current levels. In other words, M seems overdue for a new round of upgrades and / or price target increases.
A quick press could generate even more tailwind for Macy’s stocks in the future. Short rates rose 13.4% over the last two reporting periods, and the 42.83 million short stocks sold account for a whopping 13.9% of the stock’s free float, equivalent to nearly three days of pent-up purchasing power.
13,000 calls and 9,080 puts have already exceeded the band, which is five times the intraday average. The most popular call is on May 20th, followed by 14:50 in the same monthly series. Buyers of these premiums expect the security to move in both directions by the end of the week when the contracts expire.
Now it seems like a great opportunity to weigh M’s next step against options. The security’s 68% Schaeffer Volatility Index (SVI) is in the low 10th percentile of its annual range, indicating that option players are now pricing in low volatility expectations.