The company will report fourth-quarter earning after today's close
Quaker Chemical Corp (NYSE:KWR) is down 3.4% to trade at $188.69 at last check, and earlier hit a roughly annual low of $189.50. This negative price action comes ahead of the company's fourth-quarter earnings report, due out after today's close. Below, we will dive into KWR's technical setup, in addition to its previous post-earnings activity.
Digging deeper, the equity today breached a familiar floor at the $195 level, which had been supporting the shares since late January. Additionally, the security is now pacing for its fifth-straight daily loss, guided lower by the 30-day moving average. Year-over-year, KWR carries a 35.7% deficit.
The equity has a generally positive history of post-earnings reactions, finishing five of eight next-day sessions higher over the past two years, including a 10% jump in May 2020. Options traders are pricing in a 7.5% swing for KWR this time around, which is higher than the 4.4% move it averaged following its last eight reports, regardless of direction.
Shorts have been piling on the security ahead of the event. In fact, short interest added 5.3% in the most recent reporting period, and the 1.48 million shares sold short account for 11% of KWR's available float, or nearly five weeks' worth of pent-up buying power.
The options pits are similarly pessimistic. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 3.05, which sits in the 80th percentile of annual readings. This suggests short-term options traders have rarely been more put-biased in the past 12 months.
From a fundamental point of view, Quaker stock has a relatively high valuation, trading at a forward price-earnings ratio of 24.81, and a price-sales ratio of 2.18. The chemical company's balance sheet is also weak, with only $136.79 million in cash and roughly $926 million in total debt.
However, KWR's revenues are up 96% since 2018, while net income is up 155%, after experiencing a 47% decline in net income for 2019. The company has also increased its trailing 12-month revenues and net income by 20% and 282%, respectively, since 2020.
Plus, Quaker Chemical stock has analysts estimating revenue growth of 7.1%, and earnings growth of 14.56% for 2022. This potentially set ups KWR as an option from a long-term growth and value perspective, should its price continue falling in the short-term.