The three major U.S. equity indexes closed higher on Monday, with the Dow Jones industrials and the S&P 500 up nearly 2%, while the Nasdaq was up 1.6%. Financial sector stocks rose 3.3% after JPMorgan lifted its outlook on net interest income. All 11 sectors closed higher, with consumer staples (the traditional defensive play when markets are lousy) up more than 2%. Shortly after Tuesday’s opening bell, all three indexes were lower, with the Nasdaq down more than 2%.
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After markets closed on Monday, Zoom Video reported a solid beat on first-quarter earnings and an in-line number for revenue. Zoom also raised guidance. Shares traded down fractionally in Tuesday’s early action.
Before markets opened on Tuesday, Abercrombie & Fitch missed analysts’ profit estimate and beat the estimate for quarterly revenue. Downside guidance for the current quarter and the fiscal year had knocked the stock down nearly 27% Tuesday morning.
Best Buy beat the earnings estimate by a penny and also beat on revenue. It lowered fiscal year guidance as well. Shares traded up by about 3.1%.
Frontline reported an in-line loss per share and hammered revenue estimates. The stock traded up about 2.7%.
NetEase beat estimates on both the top and bottom lines. The stock traded down by about 1.8%.
Petco also beat estimates on the top and bottom lines and confirmed previous guidance. Shares traded down nearly 4% early Tuesday.
After markets close on Tuesday, Dick’s Sporting Goods, Intuit and Toll Brothers will report quarterly earnings, along with Grindrod, Nordstrom and Star Bulk Carriers. After Wednesday’s closing bell, results are due from Nvidia, Snowflake and Splunk.
Here is a look at four firms set to report earnings first thing Thursday morning.
Alibaba
Over the past 12 months, shares of Alibaba Group Holding Ltd. (NYSE: BABA) have lost about 60% of their value. Tighter Chinese government regulation and heavier U.S. pressure for Chinese firms to comply with independent audit requirements in order to remain listed on U.S. exchanges have posed strong headwinds for Alibaba and its shareholders.
There are 43 analysts covering the company, and 37 of them have ratings of Buy or Strong Buy. The other six rate the stock at Hold. At a recent share price of around $83.60, the upside potential based on a median price target of $156.02 is about 86%. At the high price target of $264.10, the upside potential is 216%. The company’s median price target is down about $25.00 from its level three months ago, and the high target is down more than $40.
For Alibaba’s fourth quarter of fiscal 2022, analysts are expecting revenue of $29.91 billion, which would be down 21.7% sequentially but 46.4% higher year over year. Adjusted earnings per share (EPS) are expected to come in at $1.08, up nearly 225% sequentially and down by 120.2% year over year. For the full fiscal year that ended in March, Alibaba is expected to report EPS of $7.67, up 517.3%, on sales of $127.48 billion, up 16.5%.
The company’s stock trades at 11.4 times expected 2022 EPS, 10.9 times estimated 2023 earnings of $8.02 and 9.7 times estimated 2024 earnings of $9.03 per share. The stock’s 52-week range is $73.28 to $230.89. Alibaba does not pay a dividend, and the total shareholder return for the past year was negative 60.3%.
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Baidu
Beijing-based Baidu Inc. (NASDAQ: BIDU) is China’s premier search engine. The company’s share price has been sinking ever since late last June and is down about 38.7% over the past 12 months. The company is included in the U.S. Securities and Exchange Commission’s list of Chinese firms that may be forced to give up U.S. stock exchange listings unless they provide more transparent access to accounting practices. Threatened delisting, stricter Chinese regulation and China’s recent coronavirus lockdowns are expected to be an anchor on Baidu’s quarterly results.
Of 21 brokerages covering the stock, 15 have a Buy or Strong Buy rating and six more rate the stock at Hold. At a share price of around $115.60, the stock’s upside potential based on a median price target of $199.55 is about 72.6%. At a high price target of $318.05, the upside potential is 175%.
Analysts expect Baidu to post first-quarter 2022 revenue of $4.17 billion, a sequential decrease of 19.9% and a 2.9% decline year over year. Adjusted EPS are forecast at $0.83, down 120% sequentially and 54.5% year over year. For full fiscal 2022, the consensus estimate calls for EPS of $6.95, or 14.2% higher year over year, and revenue of $19.74 billion, up 0.8%.
The stock trades at 16.7 times expected 2022 EPS, 12.6 times estimated 2023 earnings of $9.23 and 10.6 times estimated 2024 earnings of $10.99 per share. The stock’s 52-week range is $101.62 to $209.17. Baidu does not pay a dividend, and the total shareholder return for the past year was negative 38.7%.
24/7 Wall St.Dollar Tree
Off-price retailer Dollar Tree Inc. (NASDAQ: DLTR) has added around 17.6% to its share price over the past 12 months. Since posting a 52-week high in mid-April, shares have fallen by about 27%. Rival Dollar General’s share price is down 4.2% for the past 12 months and about 25% since mid-April. Poor reports from both Walmart and Target have pummelled the stock in the past week, and expectations set before then are almost certainly too optimistic.
Analysts are cautious. Of 26 brokerages covering the stock, 12 rate it at Hold and 12 at Buy or Strong Buy. At a share price of around $127.60, the upside potential based on a median price target of $173 is 35.6%. At the high price target of $200.00, the upside potential is 56.7%.
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First-quarter 2023 revenue is forecast at $6.76 billion, down 4.4% sequentially and 4.3% year over year. Adjusted EPS are forecast at $1.98, down 1.3% sequentially and 23.8% higher year over year. For full fiscal 2023, analysts expect Dollar Tree to post EPS of $7.88, up 35.9%, on sales of $27.89 billion, up 6%.
Dollar Tree stock trades at 16.2 times expected 2023 EPS, 14.3 times estimated 2024 earnings of $8.90 and 12.6 times estimated 2025 earnings of $10.14 per share. The stock’s 52-week range is $84.26 to $177.19. The company does not pay a dividend, and the total shareholder return for the past year is 19%.
Macy’s
Shares of Macy’s Inc. (NYSE: M) have dropped about 3.7% over the past 12 months. That includes a drop of more than 53% since mid-November. When the company reported results for the January quarter in February, it beat estimates on both the top and bottom lines and said it would not separate its e-commerce business from the rest of the company despite demands from an activist investor. The retailer also presented an upbeat outlook for the year. Given inflationary headwinds, however, Macy’s and its investors may need to recalibrate.
Only four of 17 analysts rate Macy’s stock as a Buy or Strong Buy. Another eight rate the shares at Hold and five have Sell or Strong Sell ratings. At a share price of around $17.20, the upside potential based on a median price target of $28.50 is 65.7%. Based on a high price target of $50, the potential upside on the shares is almost 194%.
24/7 Wall St.Analysts forecast fiscal first-quarter revenue of $5.33 billion, down 38.4% sequentially but about 13.2% higher year over year. Adjusted EPS are tabbed at $0.83, down 66.3% sequentially and up 112.8% year over year. For the 2023 fiscal year ending next January, analysts are currently looking for EPS of $4.34, down 18.3%, on sales of $24.52 billion, up just 0.2%.
Macy’s stock trades at 4.0 times expected 2023 EPS, 4.1 times estimated 2024 earnings of $4.26 and 4.4 times estimated 2025 earnings of $3.95 per share. The stock’s 52-week range is $15.68 to $37.95. The company pays an annual dividend of $0.30 (yield of 3.6%). Total shareholder return for the past year was negative 0.3%.
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