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Earnings Previews: Analog Devices, Lowe's, Target, TJX Companies
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Some of the country’s largest retailers are reporting their latest quarterly results this week. Most retailers operate on a slightly different quarterly schedule, with their annual calendar beginning in February and ending in January. For these firms, their second quarter of the 2022 fiscal year ended in July. A few big tech companies are also reporting results this week.
After markets close Monday, Roblox, StoneCo and Tencent Music are scheduled to report results. Home Depot, JD.com, Sea and Walmart are on deck for Tuesday before the opening bell.
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Here are five companies reporting results before markets open on Wednesday.
Analog Devices
Analog Devices Inc. (NASDAQ: ADI) makes a wide range of analog, mixed-signal and digital signal processing chips. The company’s share price has risen by about 48% over the past 12 months, including a 16% increase so far in 2021. Its automotive business should benefit from the constraint in availability, but profits tied to scarcity rarely last very long. Analysts will be looking for some longer-range outlook that includes production increases and higher sales.
Twenty of 25 surveyed analysts have Buy or Strong Buy ratings on the stock, and another four rate the shares a Hold. At a recent price of about $170.10, the stock’s upside potential based on a median price target of $185 is about 8.8%. At the high target price of $206, the upside potential is about 21%.
For its fiscal third quarter ended in July, analysts are forecasting revenue of $1.71 billion, which would be up about 2.9% sequentially and 17.1% year over year. Adjusted earnings per share (EPS) are forecast at $1.61 for the quarter, up 4.7% sequentially and 18.4% year over year. For the 2021 fiscal year, the forecasts call for EPS of $6.29, up 28%, and revenue of $6.72 billion, up 20%.
The stock trades at 27.0 times expected 2021 EPS, 24.3 times estimated 2022 earnings and 22.3 times estimated 2023 earnings. The stock’s 52-week range is $110.66 to $175.25, and the company pays an annual dividend of $2.76 (yield of 1.62%).
Lowe’s
Home improvement retailer Lowe’s Companies Inc. (NYSE: LOW) has added about 25% to its share price over the past 12 months, including a gain of about 21% for the year to date. That’s better than the 12-month gain of almost 21% at rival Home Depot but lower than Home Depot’s 27% gain for 2021 to date. Lowe’s appears to have been hit harder by the sharp drop in lumber prices.
Of 33 analysts covering the stock, 26 rate the shares a Buy or Strong Buy, and six have given the stock a Hold rating. Shares trade at around $192.80, implying a potential upside based on a median price target of $225 of 16.7%. At the high target of $266, the implied upside is nearly 38%.
For Lowe’s second quarter of fiscal 2022, analysts expect revenue of $26.7 billion, up 9.3% sequentially but down about 2.2% year over year. Forecast EPS of $4.00 would be about 24.5% higher sequentially and 6.7% higher year over year. For the full 2022 fiscal year, the EPS forecast is $10.98, up almost 24% year over year, while the sales forecast of $91.46 billion is about 2.1% higher.
Lowe’s stock trades at 17.4 times expected 2022 EPS, 16.1 times estimated 2023 earnings and 14.6 times estimated 2024 earnings. The stock’s 52-week range is $146.72 to $215.22, and Lowe’s pays an annual dividend of $3.20 (yield of 1.68%).
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Target
Another mega-retailer reporting results Wednesday morning is Target Corp. (NYSE: TGT). Target has posted a jump of almost 93% in its share price over the past 12 months, including a year-to-date gain of nearly 48%. In both the past year and the year to date, Target’s share price growth has dwarfed competitor Walmart’s, which has seen its stock price rise by 15.6% over the past 12 months and about 6% for the year to date. After a big year in 2020, how much growth will it take to satisfy investors this year?
Analysts are mostly bullish on Target stock, with 22 of 29 rating the stock a Buy or Strong Buy. Six more have Hold ratings on the stock. At a price of around $258.30, the stock has outrun its median price target of $257.95. At the high price target of $305, the upside potential on the stock is about 18%.
Target is expected to post second-quarter revenue of $25.03 billion, up about 3.5% sequentially but down about 8.9% year over year. Adjusted EPS are forecast to come in at $3.53, down about 4.3% sequentially but up 4.4% year over year. For the 2022 fiscal year, analysts expect EPS to rise nearly 32% to $12.42 and sales to increase by 8.9% to $101.93.
Target’s stock trades at 20.8 times expected 2022 EPS, 20.9 times estimated 2023 EPS and 19.8 times estimated 2024 EPS. The stock’s 52-week range is $134.67 to $267.06 and Target pays an annual dividend of $3.60 (yield of 3.8%).
TJX Companies
TJX Companies Inc. (NYSE: TJX) operates around 3,000 retail stores worldwide under well-known names like T.J. Maxx, Marshall’s and HomeGoods. Its market cap of more than $84 billion is the largest by far of any apparel retailer. The company’s stock has risen by about 23% over the past 12 months but has stalled since the beginning of the year, rising by just 3.6% so far in 2021. TJX’s outlook for the coming holiday season will play a big role in how the stock moves after the earnings report is released.
Twenty of 26 analysts rate the stock as a Buy or Strong Buy, and five more rate the stock a Hold. At a price of around $70.10, the implied upside based on the median price target of $79 is about 12.7%. At the high target of $91, the upside potential is nearly 30%.
Analysts expect second-quarter revenue to rise by nearly 9% sequentially to $10.98 billion, which would be a year-over-year jump of nearly 65%. EPS are forecast to rise almost 30% sequentially to $0.57, compared with a year-ago loss of $0.18. For the full year, analysts forecast EPS of $2.62, up more than 900% year over year, on a revenue increase of nearly 44%.
TJX stock trades at 26.8 times expected 2022 EPS, 22.0 times estimated 2023 earnings and 19.4 times estimated 2024 earnings. The stock’s 52-week range is $50.06 to $74.65, and TJX pays an annual dividend of $1.04 (yield of 1.48%).
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