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Earnings Previews: Bed Bath & Beyond, Constellation Brands, Walgreens and More
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While the December-quarter earnings season does not get started until next week, there are several interesting reports due out this week from companies that follow calendar-agnostic fiscal years.
Stocks had a banner year in 2021. The S&P 500 added 27.7%, the Nasdaq Composite added 22.9% and the Dow Jones industrial average added 19.5%. This year got off to a good start Monday, with both the Dow and the S&P 500 posting new closing highs, and both put up new intraday highs shortly after Tuesday’s opening bell.
The five companies featured here are not adding or subtracting anything to or from those results. Yet, they are companies in different sectors that may indicate some direction going forward. All five will report quarterly results before markets open on Thursday.
Bed Bath & Beyond
At the end of the prior quarter, specialty retailer Bed, Bath & Beyond Inc. (NASDAQ: BBBY) had seen its share price rise by about 55% over the past 12 months. In the company’s third quarter, the stock dropped about 34%. Since that August reading, the stock is down about 45%, and over the past 12 months, the total decline is more than 14%. One could argue that the company’s meme stock status drove it to highs that its fundamentals could not maintain.
Analysts have noticeably cooled to the stock over the past few months. Of 20 brokerages covering the firm, eight have a Sell or Strong Sell rating on the shares while nine have given the stock a Hold rating. At a recent share price of around $15.20, the upside potential based on a median price target of $19 is 18.4%. At the high price target of $34, the upside potential is nearly 124%.
Bed Bath & Beyond is expected to post fiscal third-quarter revenue of $1.96 billion, which would be down 1.7% sequentially and 25.6% lower year over year. Earnings per share (EPS) is forecast at $0.01, down 76% sequentially and 87.5% year over year. For the full 2022 fiscal year ending in February, current estimates call for EPS of $0.79, compared to a loss per share of $0.98 last year. Revenue is expected to fall by nearly 12% to $8.15 billion for the fiscal year.
The stock trades at 19.0 times expected 2022 EPS, 9.85 times estimated 2023 earnings and 7.4 times estimated 2024 earnings. The stock’s 52-week range is $13.38 to $53.90, and the company does not pay a dividend. Total shareholder return over the past 12 months is −16.8%.
Conagra
Over the past 12 months, the share price of packaged food giant Conagra Brands Inc. (NYSE: CAG) has dipped by about 2.3%. Revenue and profits were lower year over year in the company’s October quarter, and Conagra said it would take cost-saving measures and opportunistically raise prices to offset inflationary pressure. We are about to find out if either of those things happened and if they helped.
Most analysts following the stock (11 of 16) have a Hold rating, while the rest rate the shares at Buy or Strong Buy. At a price of around $34.25 a share, the upside potential based on a median price target of $37.50 is about 9.5%. At the high price target of $42, the upside potential is nearly 23%.
The consensus estimate for fiscal second-quarter revenue is $3.02 billion, up 13.6% sequentially but up by less than 1% year over year. EPS are expected to come in at $0.68, up 35.6% sequentially and down 16% year over year. The current estimates for fiscal 2022 ending in May call for EPS of $2.46, down about 7%, on sales of $11.24 billion, up less than 1%.
The stock trades at 13.9 times expected 2022 EPS, 13.0 times estimated 2023 earnings and 12.3 times estimated 2024 earnings. Conagra’s 52-week range is $30.44 to $39.09, and the company pays an annual dividend of $1.25 (yield of 3.67%). Total shareholder return over the past 12 months is −1.8%.
24/7 Wall St.Constellation Brands
Constellation Brands Inc. (NYSE: STZ) produces, imports and sells beer, wine and spirits in the United States and other countries. With a market cap of around $47.8 billion, it is the country’s largest publicly traded alcoholic beverage stock. The stock has added nearly 18% to its share price over the past 12 months, with all of it coming in the past two months. The beverage maker has yet to get any help from its investment in marijuana grower Canopy Growth and is still waiting for the U.S. government to lift its dangerous drug label on cannabis.
Of 24 analysts covering the company, 17 rate the stock a Buy or Strong Buy and the other seven have a Hold rating on the shares. At a share price of around $255.10, the upside potential based on a median price target of $271 is 6.2%. At the high price target of $316, the upside potential rises to nearly 24%.
Analysts expect Constellation to report fiscal third-quarter revenue of $2.28 billion, down 3.6% sequentially and 7.1% year over year. Adjusted EPS are pegged at $2.79, up 17.2% sequentially and down about 10% year over year. For fiscal 2022 ending in February, current estimates call for EPS of $9.99, up by less than 1%, and revenue of $8.71 billion, up 1.1%.
The stock trades at 25.5 times expected 2022 EPS, 21.4 times estimated 2023 earnings and 19.1 times estimated 2024 earnings. The stock’s 52-week range is $207.35 to $255.40. The high was posted Tuesday morning. Constellation pays an annual dividend of $3.04 (yield of 1.20%). Total shareholder return for the past 12 months is 19.2%.
Schnitzer Steel
Schnitzer Steel Industries Inc. (NASDAQ: SCHN), a recycling firm for both ferrous and non-ferrous metals, has seen a share price boost of around 70% over the past 12 months. Rising demand for scrap metal and increased U.S. electric arc furnace capacity have boosted demand for the company’s auto parts recycling business. The shares got a big boost when the U.S. infrastructure bill was approved, but currently it is hard to tell when the expected benefits will begin to show up.
Just three analysts cover the stock, and they are evenly split in their views: one each rating the shares a Strong Buy, a Buy or a Hold. At a share price of around $53.70, the upside potential to the low price target of $59 is 9.9%. At the high price target of $81, the upside potential is nearly 51%.
For the first quarter of fiscal 2022 that ended in November, the sales estimate is $857.06 million, up 1.4% sequentially and 74.0% higher year over year. Adjusted EPS are forecast at $1.74, down about 3.9% sequentially and up 205% year over year. For the full fiscal year ending in August, EPS are forecast at $6.39, up 4.2%, on sales of $3.43 billion, up 24%.
The stock trades at 8.4 times expected 2022 EPS, 7.2 times estimated 2023 earnings and 7.5 times estimated 2024 earnings. The stock’s 52-week range is $27.72 to $59.34. Schnitzer Steel pays an annual dividend of $0.75 (yield of 1.44%). Total shareholder return for the past 12 months is 66%.
Walgreens
Walgreens Boots Alliance Inc. (NASDAQ: WBA) is one of 2022’s Dogs of the Dow, the 10 stocks that paid the best dividend yield at the end of December 2021. The stock has added about 40% over the past year and currently trades within 10% of its 52-week high. Since December 1, the stock has added 23% to its share price. A recent report that Bain Capital is interested in buying the company’s U.K. stores (Boots) also has raised investors’ hopes in the pharmacy retailer.
Of 22 analysts covering the stock, 17 have a Hold rating on the shares and two rate the stock at Buy. At a share price of around $53.90, the stock has outrun its median price target of $52. At the high target of $70, the upside potential is nearly 30%.
For the company’s first quarter of fiscal 2022, analysts are expecting revenue of $32.82 billion, down nearly 4.2% sequentially and 9.6% year over year. Adjusted EPS are forecast to come in at $1.33, up 13.5% sequentially and 9.0% higher year over year. For the full fiscal year ending in August, consensus estimates call for EPS of $4.96, down 6.6%, on revenue of $130.98 billion, down about 1.2%.
Walgreens stock trades at 10.8 times expected 2022 EPS, 10.6 times estimated 2023 earnings and 10.3 times estimated 2024 earnings. The stock’s 52-week range is $40.77 to $57.05, and Walgreens pays an annual dividend of $1.91 (yield of 3.66%).
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