Options Trade – The Pep Boys - Manny, Moe & Jack (NYSE:PBY) Calls 
Monday, June 09, 2014

**OPTIONS TRADE: Buy the PBY Oct 2014 10.000 call (PBY141018C00010000) at or under $1.10, good for the day. Place a protective stop limit at $0.45 and a pre-determined sell at $2.00.

by Ian Harvey

June 09, 2014

Introduction

Auto parts retailer, The Pep Boys - Manny, Moe & Jack (NYSE: PBY) which offers automotive service, tires, parts and accessories, has had a disastrous year so far, having lost 15.4% year to date. The company reports its first quarter results before the market opens on June 10, with the consensus estimate calling for earnings of three cents per share and revenue of $542.14 million for the quarter.

However, Pep Boys stock has stabilized over the last month, but it really took a beating in the wake of its most recent earnings report, which was sharply weaker than expected. For its fourth quarter, the company reported a loss of six cents per share, sharply lower than the profit of five cents that Wall Street expected.

Earnings

Pep Boys-Manny Moe & Jack (NYSE:PBY) last posted its quarterly earnings results on Monday, April 14th. The company reported ($0.06) earnings per share for the quarter, missing the analysts’ consensus estimate of $0.05 by $0.11. The company had revenue of $495.70 million for the quarter, compared to the consensus estimate of $534.52 million.

During the same quarter last year, the company posted ($0.27) earnings per share. Pep Boys-Manny Moe & Jack’s revenue was down 6.6% compared to the same quarter last year. On average, analysts expect Pep Boys-Manny Moe & Jack to post $0.47 EPS for the current fiscal year and $0.58 EPS for the next fiscal year.

Conclusion

One of Pep Boys main competitors, AutoZone (AZO), released its results before the market open on May 27 and results were better than expected. If Pep Boys can follow AZO's example with better than expected earnings the stock should get a boost, and make back some of its recent losses.

Therefore, based on the facts above the following options trade is recommended…..


**OPTIONS TRADE: Buy the PBY Oct 2014 10.000 call (PBY141018C00010000) at or under $1.10, good for the day. Place a protective stop limit at $0.45 and a pre-determined sell at $2.00.



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