Shares of Bed, Bath, and Beyond (BBBY) have performed poorly in 2014, off approximately 24% so far in 2014. Like so many other retailers, the company has struggled to post strong numbers in recent quarters, blaming the harsh winter for consumers unwillingness to venture out and fork over cash for new home furnishings.
BBBY stock is trading near the low-end of its 52-week range ($59.89-$80.82), leading some to speculate even slightly better than expected earnings numbers could lead to a big rally. The company is scheduled to report earnings Wednesday after the market close. Analysts are estimating EPS of $0.95 on revenue of $2.69 billon – an estimate representing a 3% gain from this same quarter last year.
Bed, Bath, and Beyond has moved 7.4% on average following the release of earnings data (based on the past eight quarters). The stock has fallen two of the past four quarters, and four of the past eight. The BBBY Jun Weekly 61 Straddle is implying a 6.2% move, less than the historical average. We also saw an institution come in and buy 1,000 BBBY Jul 55 Puts for $0.42 in Monday’s session.
The Trade
Based on the chart and what we’ve seen from BBBY and other retailers this year, I can’t reasonably expect BBBY to perform on earnings. I would only look to initiate a short position; however, other traders might like the potential of some cheap call options given any sort of good news on the call.
