Investing

Earnings Previews: Dick's, Lithium Americas, 908 Devices, Petco

Paul Ausick

Published: March 4, 2022 12:04 pm

The number of companies posting quarterly results drops below 500 next week, as the current earnings-reporting season winds down. We will still cover those we think will be most interesting to investors, but the number of reports probably will not require a daily story.

After markets closed Thursday night, Broadcom, Costco, Gap and Marvell Technology all reported quarterly results, and they all four top-line and bottom-line estimates. Only two (Broadcom and Marvell) traded higher Friday morning. The broad markets traded lower, with all three major U.S. indexes down by about 1.5%. Demand for safer assets like gold and bonds outweighed demand for riskier assets, while crude oil prices were up another 5%, after cooling off a bit on Thursday.

Here is a look at four companies expected to report quarterly results either late Monday or before markets open on Tuesday.

Dick’s Sporting Goods

Sporting gear retailer Dick’s Sporting Goods Inc. (NYSE: DKS) has posted a share price gain of about 60% over the past 12 months, including a decline of nearly 22% since late November. Cash flow from operations was negative in the third quarter, primarily due to a swollen inventory. The company reports results first thing Tuesday morning.

The other big overhang is its relationship with Nike, which earlier this month cut ties with Foot Locker, saying the apparel giant would focus more on its own direct-to-consumer business. Nike has not indicated whether the deal it signed with Dick’s in November will continue.

Analyst sentiment trends toward bullish, with 13 of 26 ratings at Buy or Strong Buy. Another 12 analysts rate the stock at Hold. At a recent price of around $108.90 a share, the upside potential based on a median price target of $145.00 is 33.1%. At the high target of $180, the upside potential is more than 659%.

For the company’s fiscal fourth quarter, analysts are expecting revenue of $3.31 billion, which would be down 24% sequentially but up 5.8% year over year. Adjusted earnings per share (EPS) are forecast at $3.53, up 10.8% sequentially and 45.3% higher year over year. For the full fiscal year that ended in January, EPS are forecast to come in at $15.58, up nearly 155%, on sales of $12.25 billion, up nearly 28%.

The stock trades at 7.0 times expected 2022 EPS, 9.7 times estimated 2023 earnings of $11.26 and 9.5 times estimated 2024 earnings of $11.49 per share. The stock’s 52-week range is $66.76 to $147.39. Dick’s pays an annual dividend of $1.48 (yield of 1.62%). Total shareholder return for the past year was 63.7%.

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Lithium miner Lithium Americas Corp. (NYSE: LAC) has not announced when it plans to report fourth-quarter results. Based on prior release dates, analysts are expecting the report to be released before the market opens on Tuesday.

Lithium Americas has posted a share price gain of around 47% over the past 12 months. The shares peaked in late November after the Canada-based firm received initial state approval to begin mining operations at its Thacker Pass site in northeastern Nevada. The state recently issued the last required permit, but federal approval is likely to be delayed until September. The company also has been studying a spinoff of its U.S. operations while maintaining its Argentinian mines.

Analysts are bullish on lithium in general and Lithium Americas in particular. Of 15 brokerages covering the stock, 13 have rated the shares a Buy or Strong Buy and the other two have a Hold rating. At a share price of around $24.50, the upside potential based on a median price target of $39.39 is nearly 61%. At the high price target of $44.75, the upside potential is 82.7%.

Revenue estimates for the fourth quarter were not available, but analysts do expect the company to report a loss per share of $0.10, better than the prior quarter loss per share of $0.18, and less than the year-ago loss of $0.13 per share. For the full 2021 fiscal year, the company is expected to post a loss of $0.50, larger than last year’s loss of $0.37 per share.

Lithium Americas is expected to post revenue of $106.0 million in fiscal 2022 and $266.49 million in fiscal 2023. The enterprise value to sales multiple for 2022 is estimated at 28.0 and, for 2023 it is11.1. The company’s 52-week range is $11.84 to $41.56, and Lithium Americas does not pay a dividend. Total shareholder return for the past year was 60%.

908 Devices

908 Devices Inc. (NASDAQ: MASS) makes and sells electronic chemical and biochemical analysis devices like mass spectrometers. Over the past 12 months, the share price has dropped by about 68%. The company reports fourth-quarter results after Monday’s closing bell.

908 Devices has beaten revenue estimates in each of the four prior quarters but has met expectations just once in the same period and missed in the other three quarters. ARK Investment Management owns nearly 11% of the company’s outstanding shares, and they account for about 1.5% of the firm’s Genomic Revolution ETF (ARKG).

Coverage on the stock is both light and strong. All three brokerages surveyed have Buy ratings on it. At a share price of around $15.80, the potential upside based on a median (and high) price target of $45.00 is 185%.
For the fourth quarter of fiscal 2021, analysts are looking for revenue of $15.13 million, up 20.6% sequentially and 165.0% year over year. The company is expected to post an adjusted loss per share of $0.16, compared with a loss of $0.19 per share in the prior quarter and a loss of $1.48 in the year-ago quarter. For the full fiscal year, current estimates call for a loss per share of $0.78, up 18.4%, compared to a loss in 2020 of $2.35 per share. Full-year revenue is forecast to come in at $41.50 million, up 54.3% year over year.

908 Devices is not expected to post a profit in 2021, 2022 or 2023. The company’s enterprise value to sales multiple for 2021 is 9.0, for 2022 is 7.0 and for 2023 is 5.7, based on estimated sales of $53.4 million in 2022 and $66.4 million in 2023. The stock’s 52-week range is $12.60 to $58.20. The company does not pay a dividend, and total shareholder return for the past year was negative 63%.

Petco

Pet food and supply retailer Petco Health and Wellness Co. Inc. (NASDAQ: WOOF) has dropped about 13.7% from its stock price over the past 12 months. Since reaching a 52-week peak in mid-June, the stock is down more than 36%. Same-store sales comparisons have zoomed into the double digits since the pandemic hit early last year. For the two quarters before the pandemic, same-store sales comparisons were de minimis.

On Thursday, the company announced that it is purchasing the 50% stake Thrive Pet Healthcare owns in the companies’ pet hospital joint venture. The price was not specified. Petco reports results before markets open on Tuesday.

Analysts are bullish on the stock. Of 12 brokerages covering it, eight have rated the shares a Buy or Strong Buy and three have a Hold rating. At a share price of around $17.90, the upside potential based on a median price target of $25.00 is nearly 40%. At the high price target of $31.00, the upside potential is73.2%.

For the company’s fiscal fourth quarter, analysts are expecting revenue of $1.48 billion, up 2.3% sequentially and 10.4% year over year. Adjusted EPS are forecast at $0.24, up 22% sequentially and 41.2% year over year. For the full fiscal year that ended in January, EPS are forecast to come in at $0.88, up nearly 216%, on sales of $5.77 billion, up 17.3%.

Petco stock trades at 20.2 times expected 2022 EPS, 19.6 times estimated 2023 earnings of $0.91 and 17.1 times estimated 2024 earnings of $1.04 per share. The stock’s 52-week range is $16.22 to $28.73. Petco does not pay a dividend. Total shareholder return for the past year was negative 5.9%.

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