Investing

Earnings Previews: Adobe, FedEx, General Mills, Stitch Fix

Paul Ausick

Published: September 20, 2021 11:18 am

Last Updated: September 20, 2021 11:20 am

The first earnings reports for the September quarter are not due for another three weeks. In the meantime, a scaled-back calendar of reports will keep things interesting until the floodgates open in mid-October.

This week, we shall be looking at 10 companies reporting on the middle three days of the week. Here are four that are reporting quarterly results on Tuesday afternoon or Wednesday morning.
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Adobe

While it may be hard to believe that Adobe Inc. (NASDAQ: ADBE) has been a publicly traded company for nearly 40 years, it may be even harder to believe that the stock price has appreciated by nearly 272,000% in those four decades. Over the past year, the stock has added almost 40%, including a year-to-date gain of about 31%. Adobe reports fiscal third-quarter results after markets close Tuesday.

Of 27 analysts covering the stock, 22 rate the shares a Buy or Strong Buy and another four give the stock a Hold rating. At a recent price of around $651, the stock is trading higher than its median price target of $640. At the high price target of $750, the upside potential is 15.2%.

Analysts expect the company to report revenue of $3.9 billion, which would be up 1.6% sequentially and nearly 21% higher year over year. Adjusted earnings per share (EPS) are forecast at $3.02, down about 0.4% sequentially but up by 17.5% year over year. For fiscal 2021 year ending in November, analysts are looking for revenue of $15.68 billion, up 21.8%, and EPS of $12.25, up 21.3%.

Adobe stock trades at 53.0-times expected 2021 EPS, 46.5-times estimated 2022 earnings and 39.6-times estimated 2023 earnings. The stock’s 52-week range is $420.78 to $673.88. Adobe does not pay a dividend.

FedEx

Since late May, package delivery giant FedEx Corp. (NYSE: FDX) has seen a share price gain for the past 12 months drop by nearly 21% for a year-to-date gain of around 6%. The market is a bit jittery about FedEx going into the company’s busiest time of the year. Rising labor and fuel costs and, potentially, lower online sales that need delivery. For the year to date, shares are down about 1.6%. In 2020 the stock soared by 74%. FedEx reports first-quarter fiscal 2022 results after markets close Tuesday.

Analysts remain bullish on the stock, with 23 of 30 rating the shares a Buy or Strong Buy. The other seven rate the stock at hold. At a price of around $253.60, the upside potential based on a median price target of $350 is 38%. At the high price target of $381, the upside potential is about 50%.

For the quarter, FedEx is expected to report revenue of $21.86 billion, down about 3.3% sequentially and up 13% year over year. Adjusted EPS are forecast to come in at $4.93, down about 1.6% sequentially and up 1.2% year over year. For the full fiscal year, analysts are currently looking for EPS of 21.15, up 16.4%, on sales of $90.92 billion, up 8.2%.

FedEx stock trades at 11.9 times expected 2022 EPS, 10.7 times estimated 2023 earnings and 9.7 times estimated 2024 earnings. The stock’s 52-week range is $230.27 to $319.90, and FedEx pays an annual dividend of $3.00 (yield of 1.18%).

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Online retailer Stitch Fix Inc. (NASDAQ: SFIX) has added more than 25% to its share price over the past 12 months, including a year-to-date tumble of nearly 40%. Some of the volatility is due to the pandemic, and some is due to the nature of a high-growth company.
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Investors tend to pay more attention to the number of active buyers for subscription-based sellers like Stitch Fix and how much each of those subscribers spends. That leads to a look at cash flow, and Stitch Fix’s operating cash flow has been negative in each of the past two quarters. The company reports fourth-quarter fiscal 2021 results after markets close Tuesday.

Analysts are mixed on the stock with seven of 15 rating the shares a Hold and five rating the stock at Buy. At a price of around $32.55, the upside potential based on a median price target of $64.50 is 98%. At the high target of $84, the upside potential is $158%.

The revenue forecast is $548.01 million, up 2.3% sequentially and 23.6% year over year. Stitch Fix is expected to post an adjusted per-share loss of $0.14, compared to a loss of $0.18 in the prior quarter and a loss of $0.44 per share a year ago. For the full fiscal year, the adjusted net loss is forecast at $0.42, down from last year’s loss per-share loss of $0.66. Full-year revenue is forecast at $2.08 billion, up 21.5% compared to the prior year.

Stitch Fix is not expected to post a profit in 2021, 2022 or 2023. The enterprise value-to-sales multiple is 1.8 for 2021, 1.5 for 2022 and 1.3 for 2023. The stock’s 52-week range is $25.19 to $113.76. Stitch Fix does not pay a dividend.

General Mills

Before markets open on Wednesday, General Mills Inc. (NYSE: GIS) will report its first-quarter fiscal 2022 results. The stock has added about 6.4% over the past 12 months, including a year-to-date gain of around 2.9%.

Earlier this month, General Mills raised its guidance to the high end of a prior estimate of 1% to 3% in organic sales growth and the higher end of prior adjusted EPS guidance of down 2% to flat. The increases are the result of an acquisition of the pet treats business from Tyson Foods. Rising costs remain a weight, but the company is considering price and productivity increases to offset higher costs.

Analysts have taken a wait-and-see position on the stock, with 14 of 20 giving the shares a Hold rating and four more rating the stock a Buy or Strong Buy. At a price of around $58.90, the upside potential based on a median price target of $64 is about 8.7%. At the high price target of $71, the upside potential rises to more than 20%.

First-quarter revenue is forecast at $4.3 billion, down 4.9% sequentially and about 1.4% year over year. Adjusted EPS are expected to come in at $0.89, down 2.4% sequentially and down about 12.4% year over year. The current estimate for fiscal 2022 EPS is $3.74, down 1.3%, and sales are forecast at $17.91 billion, down about 1.2%.

The stock trades at 15.7 times expected 2022 EPS, 15.2 times estimated 2023 earnings and 14.6 times estimated 2024 earnings. The stock’s 52-week range is $53.96 to $64.65. General Mills pays an annual dividend of $2.04 (yield of 3.46%).