Even as rival Weight Watchers International, Inc. (NYSE:WTW) has surged on the charts, weight loss specialist NutriSystem Inc. (NASDAQ:NTRI) has failed to gain any momentum. The stock is down 23.5% in 2018, last seen trading at $40.25, but it'll have a chance to turn things around with earnings scheduled for after the close on Monday. Unfortunately for shareholders, poor earnings reactions have played a major role in NTRI's underperformance in recent quarters.
Specifically, the equity has moved lower in the session after earnings in three straight quarters, including two double-digit percentage slides of 10.5% and 12%, respectively, the last two times out. However, in this quarter last year, shares of NutriSystem surged almost 19% the session after reporting earnings. But considering the equity's dismal performance of late, that bull gap is nearly erased.
Regardless of direction, it's clear the options market is expecting another big move out of NTRI. That is, implied volatility (IV) data is pricing in a move of 16.5% for Tuesday's session. On average, NTRI stock has swung 11.3% in either direction the day after earnings, looking back eight quarters.
For what it's worth, a quick look at recent options action suggests bearish expectations, with the 10-day put/call volume ratio from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) coming in at 6.47. That ratio is in the 95th percentile of its annual range, underscoring a much healthier-than-usual appetite for long puts over calls in the past two weeks.
Skepticism is ramping up elsewhere, too. In fact, the number of NutriSystem shares held by short sellers increased 21.3% in the last two reporting periods. More than 16% of NTRI's float is now dedicated to short interest.
One group that has remained bullish is the analyst community. All six covering brokerage firms have "strong buy" ratings on NTRI -- leaving the door open for downgrades if the company again disappoints in the earnings booth next week.