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Earnings Previews: Cenovus Energy, Discovery, Norwegian Cruise Lines
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More than 1,500 companies are expected to report quarterly earnings this week. Of nine in our watch list for Monday morning, three missed profit estimates and four missed revenue estimates. ON Semiconductor reported a beat on both profits and revenue and raised full-year profit and revenue guidance above prior estimates. Shares traded up about 10% Monday morning.
We already have previewed two companies expected to report results after markets close Monday and one more that has not announced a report date yet, but often chooses this week to report prior quarter results: AMC, Diamondback Energy and NXP Semiconductors.
Our previews of three firms scheduled to report results before markets open on Tuesday (BP, Pfizer, Under Armour) and three more due after the closing bell (Activision-Blizzard, Lyft and T-Mobile) are also posted.
Here’s a look at three companies scheduled to report results first thing on Wednesday.
Cenovus Energy
Cenovus Energy Inc. (NYSE: CVE) is sometimes referred to as a mini-major integrated oil company. Based in Calgary, the company owns 50% of a refinery near Salt Lake City and 50% of another near Amarillo, Texas. Cenovus’s share price has risen by 208% over the past 12 months, including 99% in the year to date. Rising crude oil prices have played the biggest part in the share price increase. With a market cap of around $24.5 billion, Cenovus is about one-tenth the size of either Chevron or Exxon, America’s two supermajor integrated oil firms.
No surprise that analysts are unanimous in their bullish outlook for the company. All 20 rate the stock as a Strong Buy or a Buy. At a recent price of around $12.10 per share, the stock’s upside potential based on an average price target of $14.50 is 19.8%. At a high price target of $17.75, the upside potential is about 47%.
The company’s merger with Husky earlier this year affects the year-over-year comparisons. For the third quarter, revenue is forecast at $9.48 billion, which would be up 5.8% sequentially and $2.86 billion higher than last year. Adjusted earnings per share (EPS) are forecast at $0.38, up 271% sequentially and compared with a loss of $0.28 per share a year ago. For the full year, analysts expect EPS of $0.95, much better than last year’s loss per share of $1.66, on sales of $33.38 billion, up nearly 213%.
The stock trades at 12.7 times expected 2021 EPS, 7.4 times estimated 2022 earnings and 7.3 times estimated 2023 earnings. The stock’s 52-week range is $3.25 to $12.24. The high was posted Monday morning. Cenovus pays an annual dividend of $0.05 (yield of 0.46%).
24/7 Wall St.Discovery
Media company Discovery Inc. (NASDAQ: DISCA) saw its shares spike to an all-time high of more than $78 in mid-March. That was about two months before Discovery announced that it would acquire WarnerMedia from AT&T. By that time, the stock had pared off 50% from its high. Including the spike to a 12-month price boost of almost 280%, Discovery stock has added about 20% over the past 12 months.
Free cash flow rose from $179 million in the first quarter of this year to $757 million in the second. For the past 12 months, free cash flow has totaled $2.16 billion. Guiding free cash flow higher would likely give the stock a jolt higher.
Of 23 analysts covering the stock, 15 have Hold ratings and seven have ratings of Buy or Strong Buy. At a price of around $24.60, the implied gain based on a median price target of $38 is 54.4%. At the high price target of $61, the implied gain is about 148%.
Third-quarter revenue is forecast at $3.15 billion, up 2.7% sequentially and 23% year over year. Adjusted EPS are forecast at $0.41, down 57% sequentially and nearly 50% lower year over year. The current estimates for the full year call for EPS of $2.86, down nearly 11%, on sales of $12.15 billion, up nearly 14%.
Discovery stock trades at 8.5 times expected 2021 EPS, 7.6 times estimated 2022 earnings and 6.6 times estimated 2023 earnings. The stock’s 52-week range is $20.02 to $78.14. Discover does not pay a dividend.
Norwegian Cruise Lines
Since the beginning of 2020, Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) dropped has about 55%. At its nadir in the period, the share traded down about 85%, and since early June of this year, the stock is down nearly 24%. When rival Royal Caribbean released third-quarter results last week, it reported a loss per share of $5.59, $0.70 better than the year-ago loss. That did nothing to lift the spirits of Norwegian investors.
Of 18 analysts covering the stock, half have given the shares a rating of Buy or Strong Buy and eight more have Hold ratings on the stock. At a price of around $26.60, the implied gain based on a median price target of $30 is nearly 13%. At the high target of $39, the implied gain is about 47%.
Third-quarter revenue is forecast to come in at $172.3 million, up from $4.37 million in the second quarter and $6.52 million in the year-ago quarter. Analysts expect the company to post a per-share loss of $2.00, up from a loss of $1.93 per share in the prior quarter but lower than the year-ago quarterly loss of $2.35. For the full year, Norwegian is expected to post a loss per share of $6.94 compared to last year’s loss of $8.64 per share. Revenue is forecast to reach $913.08 million, down about 29% from $1.28 billion in 2020.
The stock trades at 71.3 times estimated 2022 earnings and 11.5 times estimated 2023 earnings. The stock’s 52-week range is $15.29 to $34.49, and Norwegian does not pay a dividend.
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