Can Macy’s Earnings Boost The Stock Once Again?

All eyes are on the retail sector at the moment. Investors are unpacking earnings from heavyweights Walmart (WMT) and Target (TGT), while weighing upbeat retail sales data with a looming holiday shopping season pressured by high inflation. Retailer Macy’s (M) is up next, set to release its third-quarter earnings results before tomorrow’s open. The stock is cooling off ahead of the event, last seen down 4.1% to trade at $30.92. Below, we’ll explore M’s technical setup and dig into some of its post-earnings past, to get an idea of what it could mean for the stock going forward.

Macy’s stock has enjoyed a meteoric year-over-year performance on the charts, adding 252.2% since November 2020. The shares are up 175.6% pop year-to-date, and have logged only one negative month in 2021. Along the way, M’s ascending 10-day moving average has guided the stock higher, culminating in a nearly three-year high of $32.47 on Nov. 16.

Daily chart of Macy\’s stock with 10-day moving average

Daily Chart of M Since November 2020

And there’s reason to believe the tailwinds could persist in the near futures, as Macy’s stock has a history of positive post-earnings responses over the past two years. Over these last eight next-day sessions, M saw positive returns five times, including a 19.6% pop after its last report in August that’s quite evident in the above chart. The stock has averaged a 4.9% swing, regardless of direction, in the last two years. This time around, the options market is pricing in a much bigger 16.1% move for tomorrow’s trading.

Options traders, meanwhile, have grown more cautious the past 10 weeks. 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 of 0.46 that stands higher than 80% of readings from the past 12 months. This indicates that while calls still outnumber puts on an absolute basis, long puts are being picked up at a much quicker-than-usual clip.

M is ripe for a flurry of post-earnings upgrades too, considering analysts are rather pessimistic towards the stock. Of the seven in coverage, five say \hold\ or worse, and the 12-month consensus price target of $27.25 is an 11.5% discount to the stock\’s current perch.