HSBC (NYSE:HSBC) Stock Sees Heavy Call Option Buying

HSBC Holdings plc (NYSE:HSBC) was the recipient of some unusual options trading on Tuesday. Stock traders acquired 10,270 call options on the stock. This is an increase of 396% compared to the average volume of 2,071 call options.

HSBC Stock Performance

Shares of NYSE:HSBC traded down $4.90 during midday trading on Tuesday, hitting $86.31. The company had a trading volume of 3,064,121 shares, compared to its average volume of 1,793,973. The company has a debt-to-equity ratio of 0.67, a current ratio of 0.85 and a quick ratio of 0.92. The company has a market cap of $295.90 billion, a price-to-earnings ratio of 12.25, a PEG ratio of 0.88 and a beta of 0.58. HSBC has a 12-month low of $67.56 and a 12-month high of $107.92. The company has a fifty day moving average of $100.05 and a two-hundred day moving average of $93.17.

HSBC (NYSE:HSBC) last announced its earnings results on Tuesday, October 27th. The financial services provider reported $2.10 EPS for the quarter, missing analysts’ consensus estimates of $2.20 by ($0.10). The company had revenue of $18.68 billion during the quarter, compared to the consensus estimate of $18.98 billion. HSBC had a return on equity of 13.80% and a net margin of 18.19%. On average, equities research analysts expect that HSBC will post 8.60 EPS for the current fiscal year.

HSBC Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Friday, September 25th. Stockholders of record on Friday, August 14th were paid a $0.50 dividend. The ex-dividend date of this dividend was Friday, August 14th. This represents a $2.00 annualized dividend and a dividend yield of 2.3%. HSBC’s dividend payout ratio (DPR) is 28.09%.

Institutional Inflows and Outflows

A number of hedge funds have recently made changes to their positions in HSBC. Ballast Advisors LLC purchased a new stake in HSBC in the 1st quarter worth approximately $36,000. Security National Bank of SO Dak bought a new stake in shares of HSBC during the second quarter valued at approximately $36,000. Western Wealth Management LLC bought a new position in shares of HSBC during the first quarter worth $37,000. Whipplewood Advisors LLC purchased a new position in HSBC during the first quarter valued at $41,000. Finally, City Holding Co. purchased a new position in HSBC during the second quarter valued at $67,000. 1.48% of the stock is currently owned by institutional investors.

HSBC News Summary

Here are the key news stories impacting HSBC this week:

• Positive Sentiment: HSBC reported third-quarter profit before tax of approximately $9.6 billion, up 32% year over year, supported by net interest income growth, lower expected credit losses and cost reductions. The bank also announced a share buyback of up to $1 billion and a third interim dividend of $0.10 per share. HSBC’s third-quarter profit jumps 32%, in line with estimates
• Positive Sentiment: The capital-return plans could provide support for HSBC’s valuation by returning excess capital to shareholders, particularly as the stock trades below its recent highs. HSBC share price: Is the $1 billion buyback enough to drive a rally?
• Neutral Sentiment: Unusually heavy call-option activity and reports that HSBC may combine its asset-management business with Hang Seng’s investment arm indicate speculative and strategic interest, but neither is yet a confirmed earnings catalyst. Market Chatter: HSBC to Merge Fund Business With Hang Seng’s Asset Management Unit
• Negative Sentiment: Adjusted EPS of $2.10 missed the $2.20 consensus estimate, while revenue of about $18.6 billion came in below expectations near $19.0 billion. The revenue shortfall is the primary reason investors have discounted the otherwise strong profit figure. HSBC Revenue Misses Forecasts As Wealth Business Growth Stalls
• Negative Sentiment: Wealth-management growth slowed, weakening one of HSBC’s key expansion businesses. Customers are also shifting toward higher-rate products, which can increase funding costs and pressure future net interest margins. Customers are chasing higher-rate products, and that’s bad news for banks like HSBC
• Negative Sentiment: The 32% profit increase benefited partly from the absence of substantial legal provisions recorded in the prior-year period, making the year-over-year comparison less indicative of underlying operating growth.

Analyst Ratings Changes

HSBC has been the subject of several research analyst reports. Royal Bank Of Canada reaffirmed a “sector perform” rating on shares of HSBC in a report on Monday, August 17th. BNP Paribas Exane cut HSBC from a “hold” rating to a “strong sell” rating and dropped their target price for the stock from $100.50 to $97.00 in a research report on Tuesday, August 4th. Wall Street Zen upgraded HSBC from a “hold” rating to a “buy” rating in a research note on Saturday, August 29th. Shore Capital Group lowered shares of HSBC to a “sell” rating in a research report on Wednesday, August 5th. Finally, JPMorgan Chase & Co. reiterated a “neutral” rating on shares of HSBC in a research note on Thursday, August 6th. Three investment analysts have rated the stock with a Buy rating, eleven have given a Hold rating and two have assigned a Sell rating to the company’s stock. According to MarketBeat.com, HSBC presently has an average rating of “Hold” and an average price target of $97.00.

HSBC Company Profile

HSBC Holdings plc is a global banking and financial services company headquartered in London. Its principal subsidiary, The Hongkong and Shanghai Banking Corporation, was established in 1865 to facilitate trade between Europe and Asia. HSBC’s shares trade on the New York Stock Exchange in the form of American depositary receipts under the symbol HSBC.

The company provides personal and wealth banking, commercial banking, corporate and institutional banking, investment banking, global markets, and asset management services.