Investing

Earnings Previews: Canopy Growth, Cinemark, DraftKings, Norwegian Cruise Line

Paul Ausick

Published: August 4, 2021 1:53 pm

Last Updated: August 4, 2021 1:55 pm

Earnings reports released Wednesday morning were again overwhelmingly positive, with the vast majority of companies reporting profits that beat consensus estimates. So far this earnings season, nearly 90% of S&P 500 companies have reported positive June-quarter earnings surprises.

After markets close on Wednesday, five firms we covered in an earlier preview (Electronic Arts, Fastly, Lumen, MGM Resorts and Uber) are due to report results. Before markets open on Thursday, results will be released by Hecla Mining, Moderna and ViacomCBS.
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Earlier Wednesday morning, we previewed four firms on deck to report earnings after markets close Thursday: Clean Energy, Fisker, Plug Power and Virgin Galactic.

Here are previews of four companies set to report quarterly results before Friday’s opening bell.

Canopy Growth

Canada-based cannabis grower Canopy Growth Corp. (NASDAQ: CGC) stock has lost about 2.6% over the course of the past 12 months. The Matterhorn-shaped chart peaked at $56.50 on February 10 and closed below $20 on July 27. The company is still the largest cannabis grower by market cap, but like every other marijuana grower, Canopy is waiting for U.S. federal decriminalization of cannabis. When that happens, Canopy already has agreed to acquire U.S. grower Acreage Holdings.

Most of brokerages surveyed, 12 of 18, rate Canopy at Hold. Just four rate the shares at Buy or Strong Buy, and the other two consider the stock a Sell. At a recent price of around $18.60, the implied upside based on a median price target of $28.22 is 52%. At the high price target of $33.57, the implied upside is 80%.

Analysts are forecasting revenue of $144.06 million for the first quarter of the company’s 2022 fiscal year. That’s a decline of around 9.4% sequentially but an improvement of around 50% year over year. Analysts also expect a quarterly loss of $0.22 per share, much better than the $1.28 per share loss in the prior quarter. For the full year, Canopy is expected to lose $0.67 per share, again much better than the fiscal 2021 loss of $2.51 per share. Revenue for the 2022 fiscal year is forecast to rise by 29% to $622.8 million.

Canopy is not expected to post a profit through the 2024 fiscal year. The stock trades at 11.4 times its estimated enterprise-value-to sales ratio for 2022, 8.2 times for 2023 and 5.1 times for 2024. The stock’s 52-week range is $13.83 to $56.50. Canopy does not pay a dividend.

Cinemark

Shares of theater operator Cinemark Holdings Inc. (NYSE: CNK) have risen by 27% over the past 12 months. For the year to date, however, shares are down nearly 16%. The outlook for theater attendance was brightening until early June when it became clear that optimism had overtaken results. Shares have tumbled by almost 42% since June 2. Worse is that there are only a few weeks left in the summer and theater attendance is weakening as pandemic worries increase.

Of 11 brokerages covering the firm, five rate the stock a Hold and five rate the shares a Buy or Strong Buy. At a price of around $14.60, the implied upside based on a median price target of $26 is 78%. At the high price target of $32, the implied upside is 119%.
Revenue is forecast to rise sequentially by 128% to $260.98 million. In the same quarter last year, Cinemark reported revenue of just $8.97 million. Analysts expect an adjusted loss per share of $1.13, a sequential improvement of $0.62 per share, and $0.22 per share less than in the second quarter last year. For the full year, Cinemark is expected to lose $3.55 per share compared to a per-share loss of $5.11 a year ago. Revenue is expected to rise by 116% to $1.48 billion for the fiscal year.

The stock trades at 17.7 times estimated 2022 earnings and 10.4 times estimated 2023 earnings. The stock’s 52-week range is $7.56 to $27.85. Cinemark does not pay a dividend.
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DraftKings

Digital sports betting company DraftKings Inc. (NASDAQ: DKNG) came public in a SPAC merger in April of 2020. Since then, the stock has risen by about 150%. For the year to date, however, shares are up less than 5%. The company has done well, but investors are most likely to hear about how DraftKings is positioned to compete for the expected legalization of mobile sports betting in New York this year. Gross revenue of $1 billion is a number worth fighting over.

Of 26 brokerages, 18 rate DraftKings a Buy or Strong Buy, and the rest have the shares at Hold. At a price of around $48.55, the implied upside based on a median price target of $71 is 46%. At the high price target of $105, the implied upside is 116%.

Analysts are forecasting revenue of $247.22 million for the second quarter, a sequential decline of nearly 21% but more than triple the amount posted in the same quarter last year. Analysts also expect a quarterly loss of $0.52 per share, better than the $0.79 per-share loss in the prior quarter. For the full year, DraftKings is expected to lose $2.23 per share, again better than last year’s loss of $2.80 per share. Revenue for the 2022 fiscal year is forecast to rise by 92% to $1.18 billion.

DraftKings is not expected to post a profit through the 2024 fiscal year. At the current share price, the stock trades at 15.4 times its estimated enterprise-value-to sales for 2022, 11.1 times for 2023 and 8.2 times for 2024. The stock’s 52-week range is $30.51 to $74.38. DraftKings does not pay a dividend.

Norwegian Cruise Line

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) has posted a gain over the past 12 months of about 72%. Yet the stock still trades down nearly 62% from its level in January of 2020. Recovery in the cruise industry is going to be slow and not particularly steady as the pandemic seems determined to kick the props out from under the business just as it seems to be heading for brighter shores.

Of 17 brokerages covering the stock, seven rate Norwegian as a Hold and the nine rate the shares a Buy or Strong Buy. At a price of around $22.50, the implied upside based on a median price target of $32.50 is 44%. At the high price target of $40, the implied upside is 78%.

Analysts are forecasting revenue of just $9.1 million for the second quarter, a sequential increase of nearly 195% but a decline of 46% year over year. Analysts also expect a quarterly loss of $2.00 per share, a little better than the $2.03 per-share loss in the prior quarter. For the full year, Norwegian is expected to lose $6.64 per share, again better than last year’s loss of $8.64 per share. Revenue for the 2022 fiscal year is forecast to fall by 23.4% to $980.63 million.

Norwegian is forecast to trade at 64.0 times its current trading price in 2022 and 12.8 times in 2023. The stock’s 52-week range is $13.27 to $34.49. The company does not pay a dividend.