DKS and AEO are swinging in opposite directions after earnings
Of the flood of retail earnings released ahead of the open this morning, American Eagle Outfitters Inc (NYSE:AEO) and Dick’s Sporting Goods Inc (NYSE:DKS) are making two of the most notable post-earnings swings.
At last glance, AEO was down 16.9% at $16.42, despite its better-than-expected third-quarter results and upbeat annual revenue forecast, after the company’s current-quarter operating income forecast missed estimates. Today’s bear gap has American Eagle stock firmly removing itself from its Nov. 17 52-week high of $20.21, and on track for its worst single-session drop since April 2020. While DKS is still up 18% year-to-date, keep an eye on the shares’ 100-day moving average, a trendline that is getting tested today for the first time since July.
On the other hand, Dick’s Sporting Goods stock was up 11.2% at $132.36 at last check, on track for its best single-session pop since March 7. The company beat third-quarter profit estimates and raised its 2023 guidance, noting a “very strong” back-to-school season and excitement about holiday shopping. DKS has recovered a good portion of its late-August post-earnings bear gap of 24%, but is still a long way from its pre-earnings August close of $147.04. The silver lining; the shares are now back above their year-to-date breakeven level.
Naturally, both stocks are seeing a surge in options activity. So far, AEO has seen 8,144 calls and 4,196 puts exchanged, which is already 2.8 times the average daily options volume. The weekly 11/24 16.50-strike call is the most active contract, where new positions are being opened.
DKS has seen 14,000 calls and 6,339 puts across the tape so far, which is three times the average daily options volume. The weekly 11/24 135-strike call is the most popular, followed by the 130-strike call in the same series, with new positions being opened at both.