The three major U.S. equity indexes closed sharply lower Monday. The Dow Jones industrials dropped 1.91%, the S&P 500 lost 2.14% and the Nasdaq tumbled by 2.55%. All 11 sectors ended the day with losses, led by communications services (2.9%), technology (2.8%) and consumer cyclicals (2.8%). The 10-year Treasury note popped above 3% for the first time in a month, while meme stocks AMC (down 42%) and Bed Bath & Beyond (down 16%) continued sinking. About half an hour after Tuesday’s opening bell, the three major indexes traded slightly lower.
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After markets closed Monday, Palo Alto Networks reported better-than-expected profit and revenue. The company also raised full-year guidance for earnings per share (EPS) and revenue. Shares were up about 11.3% early Tuesday.

Zoom Video beat EPS estimates but missed analysts’ consensus revenue estimate. The company also released downside guidance for the current quarter and for the fiscal year. Early trading had the stock down about 11.0%.

Before markets opened on Tuesday, JD.com reported better-than-expected profit and revenue. The stock traded down by about 1.5%.

KE Holdings also beat both top-line and bottom-line estimates but issued downside guidance for the current quarter. The stock traded down by about 1.2%.

Macy’s also beat estimates on both the top and bottom lines. Current-quarter guidance was a bit short of the profit estimate but higher than the consensus revenue estimate. Inventory remains an overhang. Shares traded up more than 5%.

Medtronic beat the EPS estimate by a penny, but revenue came in better than expected. The company reaffirmed prior fiscal-year guidance. Shares traded down about 2.6%.

After markets close Tuesday, Nordstrom, Petco, Toll Brothers and Urban Outfitters are expected to post their quarterly results. We also have previewed four companies reporting earnings after markets close on Wednesday: Nvidia, Salesforce, Snowflake and Splunk.

Here is what to expect when these four companies report results first thing Thursday morning.

Abercrombie & Fitch

Specialty retailer Abercrombie & Fitch Co. (NYSE: ANF) has shed about 48% of its share price over the past 12 months. The stock price plunged following the company’s first-quarter earnings report and sunk even lower to a 52-week low in mid-July. High inventory levels and falling margins are weighing on the share price. Analysts are not expecting much, so the company better deliver more than expected.
Analysts are mildly bullish on A&F stock, probably because expectations are so low. Half of the 10 brokerages have a Hold rating, and four more have a Buy rating. At a recent share price of around $19.80, the upside potential based on a median price target of $24.00 is 21.2%. At the high price target of $30.00, the upside potential is 51.5%.
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Consensus estimates call for A&F to post revenue of $843.56 million in the second quarter of fiscal 2023. That is 3.8% higher sequentially and down 2.5% year over year. Adjusted EPS are tabbed at $0.23, compared to the prior quarter’s loss per share of $0.27 and down 27.6% year over year. For the full fiscal year, analysts expect EPS of $1.91, down 56.1%, on revenue of $3.73 billion, up 0.4% compared to the 2022 fiscal year.

A&F stock trades at around 10.4 times expected 2023 EPS, 7.9 times estimated 2024 earnings of $2.52 and 10.3 times estimated 2025 earnings of $1.92 per share. The stock’s 52-week range is $16.24 to $48.97, and the company does not pay a dividend. Total shareholder return for the past year was negative 47.9%.

Coty

Beauty products maker Coty Inc. (NYSE: COTY) has seen its stock price decline by about 6.7% in the past 12 months. Analysts have been lowering expectations, and hedge funds have been increasing their stakes in the company, with one (Horizon) doubling its stake. Since posting a 52-week low in late May, the stock has added about 22.4% to its share price.

Of 14 analysts covering the stock, seven have Hold ratings and the rest rate the shares at Buy or Strong Buy. At a share price of around $7.30, the implied gain based on a median price target of $10.00 is 37%. At the high price target of $15.00, the upside potential is 147%.

For Coty’s fourth quarter of fiscal 2022, analysts expect the company to report revenue of $1.15 billion, down 3.2% sequentially but 8.5% higher year over year. Coty is expected to post a loss per share of $0.01, compared to EPS of $0.03 in the prior quarter and a loss of $0.09 in the year-ago quarter. For the full year, analysts currently estimate EPS of $0.28, up 40.6%, on sales of $5.28 billion, up 14.1%.

Shares trade at 20.2 times expected 2022 EPS, 17.1 times estimated 2023 earnings of $0.43 and 13.6 times estimated 2024 earnings of $0.54 per share. The stock’s 52-week range is $5.90 to $11.12, and Coty does not pay a dividend. Total shareholder return for the past year is negative 6.7%.

Dollar Tree

Off-price retailer Dollar Tree Inc. (NASDAQ: DLTR) has added around 63% to its share price over the past 12 months. The stock still trades within 5% or so of the 52-week high set in mid-April, as investors continue to see a recession ahead and consumers turning even more to low-priced goods. Rival Dollar General has managed only a bump of around 7% to its share price over the past year and could be a better opportunity. A comparison should be easy because Dollar General also is scheduled to report quarterly results Thursday morning.
Analysts are cautious. Of 26 brokerages covering Dollar Tree stock, 11 rate the shares at Hold and 13 have Buy or Strong Buy rating. At a share price of around $167.40, the upside potential based on a median price target of $185.00 is 10.5%. At the high price target of $210.00, the upside potential is 25.4%.
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Second-quarter 2023 revenue is forecast at $6.8 billion, down 1.5% sequentially but up 7.3% year over year. Adjusted EPS are forecast at $1.62, down 31.8% sequentially and 31.7% higher year over year. For the full fiscal year, analysts expect Dollar Tree to post EPS of $8.18, up 41.1%, on sales of $28.11 billion, up 6.9%.

Dollar Tree stock trades at 20.5 times expected 2023 EPS, 14.9 times estimated 2024 earnings of $9.34 and 16.0 times estimated 2025 earnings of $10.47 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 63.1%.

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Peloton

Shares of fitness product maker Peloton Interactive Inc. (NASDAQ: PTON) have declined by nearly 90% over the past 12 months. Last week, the company said it would fire another 800 employees, raise prices and reduce its store count in North America. Peloton will begin outsourcing delivery and ship its exercise bicycles unassembled, leaving the customer to set up the machine. The announced changes have had a slightly negative effect on the stock price.

Analysts remain moderately bullish on the company. Of 32 brokerages covering the shares, 16 have a Buy or Strong Buy rating while another 14 rate the stock at Hold. At a share price of around $11.60, the upside potential based on a median price target of $20.00 is 72.4%. At the high target of $35.00, the upside potential is more than 200%.

For the company’s fourth quarter of fiscal 2022, which ended in June, analysts expect revenue to total $682.93 million, down 29.8% sequentially and by 27.1% year over year. Analysts also expect a loss per share of $0.44, better than the $0.98 loss per share in the prior quarter and worse than the $0.56 per-share loss in the year-ago quarter. For the full fiscal year, analysts estimate a loss per share of $4.18, compared to a loss of $0.05 per share last year, on revenue of $3.59 billion, down about 10.8%.

Peloton is not expected to post a profit in 2022, 2023 or 2024. Based on the current share price, the stock’s estimated 2022 and 2023 enterprise value to sales multiple is 1.3 times. That multiple drops to 1.1 in 2024. The stock’s 52-week range is $8.22 to $120.62, and Peloton does not pay a dividend. Total shareholder return over the past year is negative 89.3%.

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