The three major U.S. equity indexes closed higher for a second straight session on Tuesday. The Dow Jones industrials ended the day up 2.8%, the S&P 500 closed 3.06% higher and the Nasdaq saw a gain of 3.34%. All 11 sectors closed higher, with energy (4.34%) and financials (3.79%) leading the way. Consumer staples (1.53%) and real estate (1.62%) posted the slimmest gains.
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Among Tuesday’s biggest gainers, Twitter added 22.2% on reports that Elon Musk has decided to buy the company after all. Cruise line operators Royal Caribbean, Norwegian and Carnival added 16.84%, 16.65% and 13.28%, respectively, after Norwegian said it was dropping all COVID-19 testing, masking and vaccination requirements. The others figure to follow suit.

All three major indexes traded down by about 1% in Wednesday’s premarket session.

Schnitzer Steel Industries Inc. (NASDAQ: SCHN) reported preliminary results for its fourth quarter and 2022 fiscal year on Tuesday. The company’s adjusted earnings per share (EPS) were nearly 50% below consensus estimates, and fiscal year EPS guidance was about 7% below estimates. Schnitzer said results were “adversely impacted” by declining prices, lower demand and tight supply flows, among other things. Shares, which gained about 4.3% Tuesday, traded down about 2.4% in Wednesday’s premarket. Schnitzer reports quarterly and fiscal year results on October 24.

We already have previewed two companies set to release quarterly results before markets open on Thursday: Conagra Brands and Constellation Brands.

Here is a look at two companies reporting quarterly results on Thursday and Friday.

Levi Strauss

Apparel maker Levi Strauss & Co. (NYSE: LEVI) has seen its stock drop by more than 33% over the past 12 months. Since posting a 52-week high in late November, the stock has dropped 42%. The company reports results after markets close on Thursday.

Inflation and a possible recession could hit the jeans maker hard if recent reports that major customers like Walmart and Target could stop taking new products as the retailers try to slash inventories. For contrarians, BofA’s Christopher Nardone recently reaffirmed his Buy rating on the stock and lowered his price objective to $20. Levi’s stock may not be a screaming buy, but Nardone thinks it warrants its premium multiple compared to peers.

Analysts remain bullish on the stock, with 12 of 13 rating the shares at Buy or Strong Buy. The median price target of $24.00 is about $7.40 higher than the current trading price, implying a potential upside of 30.8%. At the high price target of $33.00, the implied upside is nearly 100%. Free cash flow in the past two quarters has plunged from nearly $180 million in the fourth quarter of last year to $12.8 million in the second quarter.
For the third quarter of fiscal 2022, analysts are forecasting sales of $1.6 billion, which would be up 8.6% sequentially and by 6.7% year over year. Adjusted EPS of $0.37, up 27.4% sequentially but down 22.9% year over year, are also expected. For the full 2022 fiscal year ending in November, analysts anticipate EPS of $1.54, up 4.4%, on sales of $6.41 billion, up 11.2%.
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Levi Strauss stock trades at 10.8 times expected 2022 EPS, 10.1 times estimated 2023 earnings of $1.78 and 8.9 times estimated 2024 earnings of $1.86 per share. The stock’s 52-week trading range is $14.43 to $28.62. The company pays an annual dividend of $0.48 (yield of 3.08%). Total shareholder return for the past year is negative 32.8%.

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Tilray

Shares of cannabis grower Tilray Inc. (NASDAQ: TLRY) have dropped by about 57.3% over the past year. While Canadian pot growers continue to wait for the United States to remove marijuana from the nation’s list of dangerous drugs, they have run into problems of oversupply, falling prices and the strong U.S. dollar. Tilray, the largest Canadian firm, with a market cap of around $1.8 billion, has been diversifying by acquiring craft brewers and expanding in international markets. The company reports results first thing Friday morning.

Of 20 analysts covering the stock, 13 have a Hold rating and four rate the shares at Buy. At a share price of $3.00, the upside potential to the median price target of $4.00 is 33.3%. At the high price target of $12.00, the upside potential is 300%.

For Tilray’s first quarter of fiscal 2023, analysts are looking for revenue of $157.78 million, up 2.9% sequentially but down 6.1% year over year. Analysts expect the company to post a loss per share of $0.07, flat sequentially and year over year. For the full fiscal year ending in May, analysts forecast a loss per share of $0.23, compared to last year’s loss per share of $0.31. Full-year sales are expected to rise by 5.6% to $663.57 million.

Tilray is not expected to post a profit in 2023, 2024 or 2025. The company’s sales to enterprise value multiple is 3.2 times in 2023, 2.7 times in 2024 and 2.4 times in 2025. The stock’s 52-week range is $2.65 to $113.95. Tilray does not pay a dividend, and the total return to shareholders last year was negative 72.1%.

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