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Earnings Previews: Paypal, Roblox, SmileDirectClub, Virgin Galactic

Virgin Galactic Holdings Inc.

More than 1,500 companies are reporting quarterly earnings this week. Of four in our watch list for Thursday afternoon, one (Airbnb) beat on both revenue and profits while one (Peloton) missed on both, one beat on earnings but missed on revenue (Square) and the fourth (Uber) missed on profits but beat on revenue. Of two companies we previewed that reported early Friday, Canopy Growth beat on both the top and bottom lines while DraftKings missed on revenue and met the expected per-share loss estimate.

We also previewed one company that reports results before the opening bell on Monday. Our preview of Coty was included with the looks at Canopy Growth and DraftKings.

Here, we are previewing four companies set to report quarterly results after markets close on Monday.

PayPal

PayPal Holdings Inc. (NASDAQ: PYPL) has posted a share price gain of about 17% over the past 12 months. The company denied a reported (and short-lived) proposal to acquire Pinterest for $45 billion. PayPal has come under pressure to broaden its scope by getting a foothold in e-commerce to go along with its fintech roots. So far, the company has resisted (or gotten cold feet).

Of 45 analysts covering the stock, 39 rate PayPal shares as a Buy or Strong Buy and another five have given the stock a Hold rating. At a recent price of around $226.80, the upside potential based on a median price target of $325 is 43.3%. At the high target of $380, the upside potential is 67.5%.

Third-quarter revenue is expected to come in at $6.24 billion, which would be flat sequentially but up 14.3% year over year. Adjusted earnings per share (EPS) are forecast at $1.08, down 6% sequentially but a penny higher year over year. The current full-year estimates call for EPS of $4.72, up 21.6%, on sales of $25.78 billion, up 20.2%.

PayPal stock trades at 48.8 times expected 2021 EPS, 39.0 times estimated 2022 earnings and 31.2 times estimated 2023 earnings. The stock’s 52-week range is $178.60 to $310.16. PayPal does not pay a dividend.

Roblox

Since its initial public offering in March, Roblox Corp. (NYSE: RBLX) has added about 12% to its share price, although the stock traded up more than 35% in early June. The company’s online entertainment platform may be the ur-platform for the metaverse. Now that the company formerly known as Facebook has decided to enter the space, it could simply crush Roblox with Meta-cash. Investors are going to want to hear some comments from Roblox on what’s next for the company.

Just nine analysts cover the stock, but seven have a Buy or Strong Buy rating. At a price of around $80 a share, the upside potential based on a median price target of $90 is 12.5%. At the high target of $103, the upside potential is about 28.8%.

The consensus revenue estimate is $636.47 million, down 4.4% sequentially. Analysts also expect Roblox to post a loss per share of $0.08, considerably lower than the prior quarter loss of $0.25. For the full fiscal year, the company is expected to post a loss of $0.17, compared to last year’s loss of $0.48 per share. Revenue is forecast at $2.68 billion, up 42.2%.

Roblox is not expected to post a profit in 2021, 2022 or 2023. The stock’s enterprise value-to-sales multiple for 2021 is 16.3. For 2022 and 2023, the multiple is 13.5 and 11.2, respectively. The stock’s 52-week range is $60.50 to $103.87, and the company does not pay a dividend.


SmileDirectClub

Over the past 12 months, shares of SmileDirectClub Inc. (NASDAQ: SDC) reached their peak in late January, when the heavily shorted company was swept up in the initial meme stock frenzy. Since then the shares have lost 64% and currently trade much closer to their annual low than to the high, despite two smaller spikes in mid-September and early October. While short interest in the stock remains high (nearly 31% of the total float), trading volume has been dropping and retail investors may be looking elsewhere for short squeeze opportunities.

Of 12 analysts covering the stock, seven have a Hold rating and four have given the shares a Strong Sell rating. At a price of around $5.40, the upside potential based on a median price target of $6, is 11%. At the high price target of $11, the upside potential is 104%.

Third-quarter revenue is forecast at $182.51 million, up 4.8% sequentially and 8.3% year over year. The company is expected to post a loss per share of $0.12, slightly better than the $0.14 loss per share in the prior quarter but worse than last year’s third-quarter loss of $0.10. For the full year, SmileDirectClub is expected to post a loss per share of $0.47, worse than last year’s loss of $0.29, on sales of $757.23 million, up 15.3%.

The company is not expected to post a profit in 2021, 2022 or 2023. The stock’s enterprise value-to-sales multiple for 2021 is 1.2. For 2022 and 2023, the multiple is 1.0 and 0.8, respectively. The stock’s 52-week range is $4.63 to $16.08. SmileDirectClub does not pay a dividend.

Virgin Galactic

For the past 12 months, shares of Virgin Galactic Holdings Inc. (NYSE: SPCE) have taken off like one of the company’s spacecraft. The stock price also has returned to earth just as quickly. In mid-February, it posted its 52-week high at more than $60, before sinking to around $15 by mid-May. In late June, the stock had soared back up to trade at more than $55, but by late October, the shares traded at around $19. Virgin Galactic has said it won’t fly any more tourist missions until late next year, and that has really hobbled a favorite among retail investors.

Analysts are mixed on the stock. Of 11 brokerages covering the shares, five give the stock a Buy rating, three have a Hold rating and the others have a Sell or Strong Sell ratings. At a price of around $19.40, the upside potential based on a median price target of $25, is about 29%. At the high target of $50, the upside potential is 158%.

Virgin Galactic is expected to report revenue of $1.69 million for the third quarter, up 195% sequentially. Analysts also expect a loss per share of $0.28, better than the prior quarter loss of $0.39. For the full year, the company is expected to post a loss per share of $1.43, compared to last year’s loss of $1.25 per share, on sales of $1.8 million, up 655%.

The company is not expected to post a profit in 2021, 2022 or 2023. For 2022 and 2023, the stock’s enterprise value-to-sales multiple is 316.8 and 56.6, respectively. The stock’s 52-week range is $14.27 to $62.80. Virgin Galactic does not pay a dividend

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