The bulls are on track for another winning week but their other streaks could be snapped if current levels hold. We still have the second half of trading to go and we saw the bulls pull the Dow positive earlier this week in the last 5 minutes of trading so let’s see how it plays out.
Ulta Salon, Cosmetics & Fragrance (ULTA, $75.94, down $12.43) shares are getting whacked today following a lowered forecast. The company’s 4Q earnings came in above expectations at $64.5 million in profit, or $1 a share on revenue of $759 million. The suit-and-ties expectations were looking for $0.98 a share on $752 million in sales. That was the good news.
The bad news is the current quarter is only expected to do $0.60-$0.63 a share versus expectations for $0.72 a share. Same-store sales slipped from an 11% increase to 8.8% on stores opened at least a year. Management is in turmoil. There could be more downside pressure on this one.
On Wednesday, we said there were 2 stocks we expected big moves on earnings and Ulta was one. Men’s Wearhouse (MW, $33.98, down $0.46) was the other after surging triple 5’s ($5.55), or 19%, yesterday. The March 30 calls (MW130316C00030000, $4.00, down $1.00) surged over 600% after closing at 71 cents on Wednesday but are down today on option expiration.
We looked at the put option chains on Ulta before the close yesterday and the March 80 puts (ULTA130316P00080000, $4.48, up $3.83) could have been picked up for 65 cents and are up a whopping 590% today. This would have been a sweet play but the put options also expire after the close and if shares had stayed above $80 these options would have expired worthless.
The Ulta April 80 puts (ULTA130420P00080000, $1.60, up $0.10) were a little pricey for an earnings play but they would have been “safer” and are up 231% on today’s share spanking.
We have a lot of action to cover as the March option cycle comes to a close. As we head to press, the Dow is down 29 points to 14,515 while the S&P 500 declining 2 points to 1,561. The Nasdaq is lower by 5 points to 3,253.
Subscribers, check the Members Area for the important updates and your email inbox for the rest of the day. If we do not take any action before the close, we will be back on Sunday night with the Weekly Wrap and on Monday morning with the Daily. Until then, have a great weekend everyone!