Investing

Earnings Previews: Bed Bath & Beyond, CarMax, Micron, Paychex

Paul Ausick

Published: September 28, 2021 11:08 am

Last Updated: September 28, 2021 12:47 pm

As we get closer to the September-quarter earnings season, the number of earnings reports released each week seems to get smaller.

We expect to preview four reports due out during the week of October 4, and here are four that are due this week, including one coming after markets close Tuesday.
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Micron Technology

Semiconductor maker Micron Technology Inc. (NASDAQ: MU) has added about 53% to its share price over the past 12 months, but since peaking in April, the stock has dipped by 23%. Year to date, the share price is flat. Demand for Micron’s memory chips is expected to decline as demand for personal computers dips. That will put downward pressure on prices, even though data center demand is expected to remain strong. The company is expected to report fiscal fourth-quarter results after markets close Tuesday.

Of 33 analysts covering the stock, 26 have a Buy or Strong Buy rating on the shares and the other seven rate the stock at Hold. At a recent price of around $74.50, the upside potential, based on a median price target of $105, is nearly 41%. At the high target of $165, upside potential is a whopping 121%.

Fourth-quarter revenue is forecast at $8.21 billion, which would be up about 10.7% sequentially and nearly 36% year over year. Adjusted earnings per share (EPS) are forecast at $2.34, up nearly 25% sequentially and 117% year over year. For the full fiscal year, revenue is forecast at $27.69, up 29.2%, and EPS is forecast at $6.02, or nearly 113% higher.

The stock trades at 12.3 times expected 2021 EPS, 6.9 times estimated 2022 earnings and 7.1 times estimated 2023 earnings. The stock’s 52-week range is $46.50 to $96.96. Micron pays an annual dividend of $0.10 (yield of 0.13%).

Bed Bath & Beyond

Specialty retailer Bed Bath & Beyond Inc. (NASDAQ: BBBY) has seen its share price rise by nearly 58% over the past 12 months, including two sharp spikes, one in late January and a second in early June. In the first two weeks of this year, Bed Bath & Beyond’s stock jumped by 30%. At last night’s closing price, the stock traded essentially flat with its price on January 13 of this year. The company reports second-quarter fiscal 2022 results before markets open on Thursday.

Analysts have taken a wait-and-see stance on the stock, with 13 of 21 brokerages putting a Hold rating on the stock. There are just three Buy ratings out of the remaining eight. At a price of around $23.60, the upside potential, based on a median price target of $30, is 27%. At the high price target of $44, the upside potential is 86%.

Bed Bath & Beyond is expected to post second-quarter revenue of $2.06 billion, up 5.4% sequentially and down 23% year over year. EPS are forecast at $0.52, up 940% sequentially, and up two cents year over year. For the 2022 fiscal year, current estimates call for EPS of $1.47 compared to a loss per share of $0.98 last year. Revenue is expected to dip by 10% to $8.31 billion for the year.

The stock trades at 15.7 times expected 2022 EPS, 10.5 times estimated 2023 earnings and 8.4 times estimated 2024 earnings. The stock’s 52-week range is $14.25 to $53.90, and the company does not pay a dividend.

Used car dealer CarMax Inc. (NYSE: KMX) has experienced share price growth of nearly 55% over the past 12 months. Rising used car prices have contributed a lot to that increase.
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Last week’s average price was nearly 19% higher than for the same period a year ago. In July, the average listing price for a used car on a U.S. dealer’s lot was $25,500, the first time ever that prices had topped that mark. That price was 28% higher than the average in July 2020 and 32% higher than in July of 2019. With the average new car price fast approaching $40,000, a used car remains a pretty good deal. The trick for CarMax, and other used car dealers, is to keep the inventory flowing.

CarMax reports second-quarter fiscal 2022 results before markets open on Thursday.

Sentiment for the company is bullish, with 12 of 17 brokerages giving CarMax a Buy or Strong Buy rating and four more rating the stock at Hold. At a price of around $145.10, the upside potential, based on a median price target of $153, is about 5.4%. At the high target of $200, the upside potential is about 38%.

Analysts expect the company to post revenue of $6.85 billion for the second quarter, down 11% sequentially but up 28% year over year. EPS are forecast to come in at $1.88, down 28.4% sequentially but 5% higher year over year. For the 2022 fiscal year, analysts are forecasting EPS of $7.22, up nearly 60%, on sales of $26.72 billion, which would be a 41% gain.

The stock trades at 19.9 times expected 2022 EPS, 20.0 times estimated 2023 earnings and 20.1 times estimated 2024 earnings. The stock’s 52-week range is $84.70 to $146.98, and CarMax does not pay a dividend.

Paychex

Paychex Inc. (NASDAQ: PAYX) is the country’s second-largest integrated human resources outsourcer of staffing and employment services like payroll and insurance. The stock has added about 44% to its share price over the past 12 months, including a 19% increase in 2021 to date. Since posting its 52-week high on August 20, however, the stock has slipped by about 5.8%

Estimates for quarterly revenue and profits are relatively muted, and Paychex may have to give estimates a good beating in order to turn around the recent price drop. The company reports fiscal 2022 first-quarter results before markets open Thursday.

Of  20 analysts covering the stock, 13 rate the shares a Hold. Just three rate the stock at Buy or Strong Buy. At a price of around $107.40, the shares have outrun their median price target of $106. The high price target of $125 implies upside of about 16.4% to the current price.

Analysts expect first-quarter revenue of $1.04 billion, up 1.3% sequentially and 11.6% year over year. Adjusted EPS are expected to come in at $0.80, up 11.5% sequentially and 27% year over year. For the full fiscal year, analysts currently forecast EPS of $3.38, up 11.2%, and revenue of $4.36 billion, up 7.4%.

The stock trades at 31.9 times expected 2022 EPS, 30.1 times estimated 2023 earnings and 27.8 times estimated 2024 earnings. The stock’s 52-week range is $78.00 to $118.22. Paychex pays an annual dividend of $2.64 (yield of 2.43%).