The week just ending saw earnings reports from all five of the largest (by market cap) U.S.-based companies. All five are tech giants, and only one (Amazon) staggered a bit.
In the week of August 2, we shall be getting June-quarter results from several oil and gas exploration and production companies, along with some big health care firms and media companies. We already have previewed two stocks of interest that will report results before markets open Monday: Ferrari and ON Semiconductor.
We also already have previewed three companies set to report results after markets close Monday: NXP Semiconductors, Take-Two Interactive and Transocean. Here is a look at three companies set to report earnings before markets open on Tuesday.
Alibaba
Chinese e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) has had a tough 12 months. The stock is down about 23%, including a decline of more than 16% so far this year. The Chinese government’s pressure on the company and its founder, Jack Ma, led to the cancellation of a proposed initial public offering for Ant Financial, of which Alibaba is the controlling stakeholder. It also led to warnings as recently as Friday morning that the government will increase its oversight of companies with shares trading on foreign exchanges. All this has had a chilling effect on China-based stocks.
Of 49 surveyed brokerages covering the company, 46 have given Alibaba a Buy or Strong Buy rating and the other three have rated the stock at Hold. At a recent price of around $195.50, the implied gain based on a median price target of $285.65 is 61%. At the high target of $352, the upside potential is 80%.
Analysts expect Alibaba to report first-quarter fiscal 2022 revenue of $32.32 billion, which would be up 13% sequentially and about 48% year over year. Adjusted earnings per share (EPS) are pegged at $2.21, up more than 1,000% sequentially and about 10% year over year. For the full 2022 fiscal year, analysts expect the company to post EPS of $9.76, up 685%, and revenue of $143.53 billion, 31% higher, year over year.
The stock trades at 20.1 times expected 2022 EPS, 16.0 times estimated 2023 earnings and 13.0 times estimated 2024 earnings. The stock’s 52-week range is $179.67 to $319.31. Alibaba does not pay a dividend.
Nikola
Electric heavy truckmaker Nikola Corp. (NASDAQ: NKLA) came public in June of last year, and the shares almost immediately soared, rising by 135%. Since that peak, the stock has plunged to trade at a loss of 64% to its closing price on the day of its IPO. A stinging short-seller report, the replacement of the company’s founder and CEO, and, just this week, an indictment of the former CEO, have rattled the company and investors alike. Whether Nikola can recover remains an open question.
Just seven brokerages cover the firm, and five of them rate the stock a Hold while the other two consider the shares a Buy. At a price of around $12 a share, the implied upside to a median price target of $18 is 50%. At the high target of $30, the upside potential is 150%.
Analysts expect the company to post just $20,000 in second-quarter income and an adjusted loss per share of $0.29. Nikola has not delivered any products this year and may not until late this year. For the full year, analysts expect a loss per share of $1.03 and revenue of $18.33 million, including $17.08 million in the fourth quarter.
Nikola is not expected to produce revenue or post a profit in any of the next three fiscal years. As a multiple of enterprise value-to-sales, Nikola’s 2021 EV/sales ratio is 266.5 times, falling to 26.0 times in 2022 and dropping to 5.5 times in 2023. The stock’s 52-week range is $9.37 to $54.56. Nikola does not pay a dividend.
Under Armour
Apparel maker Under Armour Inc. (NYSE: UAA) has seen its share price rise by about 76% over the past 12 months. Much of the increase came last year, with just 19% of it going on the books in 2021. As the company’s stock price dipped, competitor Nike’s rose. Under Armour’s share price was up 120% in early May. Since then, the shares have dropped 20% and Nike’s have added almost 27%.
Of 28 analysts covering the stock, 15 have assigned a Hold rating and another nine rate the shares at Buy or Strong Buy. At a price of around $20.50, the stock’s upside potential based on the median price target of $25 is 22%. At the high price target of $36, the upside potential is more than 75%.
For the second quarter, revenue is expected to decline sequentially by about 3.4% to $1.22 billion but rise by 72% year over year. Earnings of $0.06 per share would a big improvement from a per-share loss of $0.31 in the year-ago quarter. For the full year, analysts expect EPS of $0.33, compared with a year-ago loss of $0.26. Revenue is expected to rise by more than 19% year over year to $5.34 billion.
Under Armour stock trades at 56.3 times expected 2021 EPS, 37.1 times estimated 2023 earnings and 25.7 times estimated 2023 earnings. The stock’s 52-week range is $9.63 to $26.45. Under Armour does not pay a dividend.
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