The three major U.S. equity indexes closed higher again Friday. The Dow Jones industrials ended the day up 0.1%, the S&P 500 closed 0.92% higher and the Nasdaq Composite saw a gain of 1.88%. Six of 11 sectors closed higher, with energy (3.06%) and communications services (2.48%) posting the biggest gains. Health care (−1.28%) and utilities (−1.14%) trailed.
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On Tuesday, the Bureau of Labor Statistics releases its producer price index (PPI) for October. Economists are expecting core PPI and PPI to tick higher. The monthly report on retail sales is due Wednesday, while Thursday and Friday bring data related to new home construction and existing home sales in October. The weekly report on jobless claims is due Thursday.
The three major indexes traded lower in Monday’s premarket session.
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There were no notable earnings reports released on either Friday or Monday. But beginning Tuesday morning, many of the nation’s largest retailers will be reporting quarterly results, starting with Home Depot and Walmart before the markets open.
Here is a look at four companies, including two Dow components, on deck to report results first thing Wednesday morning.
Lowe’s
Over the past 12 months, the share price of Lowe’s Companies Inc. (NYSE: LOW | LOW Price Prediction) has decreased by about 11.6%. After posting a year-to-date high in early January, the shares have dropped almost 20%.
Earlier this month, Lowe’s said it was selling its 450 or so Canadian stores for $400 million. Investors have jumped on the stock, pushing it up nearly 8% since the announcement. The company is also expected to get a boost from declining home sales. Homeowners who were thinking about selling are likely to wait until the housing market improves and, if history is any guide, often spend money improving their homes so that they will sell for more when that happens.
Of 31 analysts covering the company, 19 have a Buy or Strong Buy rating. Another 11 rate the stock at Hold. At a recent share price of around $209.00, the upside potential to a median price target of $235.00 is 12.4%. At the high price target of $300.00, the upside potential is 43.5%.
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Fiscal third-quarter revenue is forecast at $23.18 billion, which would be down 15.6% sequentially but up 1.1% year over year. Adjusted earnings per share (EPS) are expected to come in at $3.09, down 33.8% sequentially and 13.2% higher year over year. For the full 2023 fiscal year ending in January, analysts expect EPS of $13.53, up 12.4%, on sales of $96.89 billion, up 0.7%.
Lowe’s stock trades at 15.4 times expected 2023 EPS, 14.7 times estimated 2024 earnings of $14.27 and 13.2 times estimated 2025 earnings of $15.85 per share. The stock’s 52-week trading range is $170.12 to $263.31, and the company pays an annual dividend of $4.20 (yield of 2.01%). Total shareholder return for the past year is negative 9.9%.
Target
Target Corp. (NYSE: TGT) posted its 52-week high on November 15 of last year, and shares closed Friday down more than 50% from that high. On Friday, the company announced a new store design that is both larger and more focused on its same-day delivery service and curbside pickup. Target stores currently fulfill more than 95% of the company’s digital orders, so using the store locations as fulfillment centers allows Target to keep transportation costs lower than online-only retailers like you-know-who.
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Of 32 analysts covering the company, 22 have a Buy or Strong Buy rating and 10 others rate the shares a Hold. At a price of around $173.30 a share, the upside potential based on a median price target of $190.00 is about 9.6%. At the high price target of $223.00, the upside potential is 28.7%.
The consensus third-quarter 2023 revenue estimate is $26.4 billion, up 1.4% sequentially and by 2.9% year over year. Adjusted EPS are forecast at $2.18, up more than 450% sequentially and down 28.1% year over year. For the full year ending in January, analysts expect Target to report EPS of $8.04, down 40.7%, on sales of $109.67 billion, up 3.5%.
Target stock trades at 21.6 times expected 2023 EPS, 14.6 times estimated 2024 earnings of $11.90 and 13.0 times estimated 2025 earnings of $13.38 per share. The stock’s 52-week range is $137.16 to $268.98. The company pays an annual dividend of $4.32 (yield of 2.49%). Total shareholder return for the past year was negative 32.1%.
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TJX Companies
TJX Companies Inc. (NYSE: TJX) operates around 3,000 retail stores worldwide under well-known names like T.J. Maxx, Marshall’s and HomeGoods. Over the past 12 months, the share price has risen by around 7.4%. Since posting its 52-week high in early January, the stock sank nearly 28% before recovering to close Friday at down by less than 1% for the year to date. Off-price retailers are expected to perform well as consumers look to increase the bang they get for their buck during the current macro environment.
Of 24 analysts covering the company, 18 have a Buy or Strong Buy rating and the others rate the shares at Hold. At a share price of around $76.90, the upside potential based on a median price target of $79.00 is 2.7%. At the high price target of $90.00, the upside potential is 21.8%.
Third-quarter revenue is forecast to come in at $12.29 billion, up 3.8% sequentially and down 2.0% year over year. Adjusted EPS are pegged at $0.80, up 16.1% sequentially and 2.4% lower year over year. For the 2023 fiscal year ending in January, analysts expect EPS of $3.1, up 33.5%, on sales of $49.81 billion, up 2.6%.
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TJX’s stock trades at 23.8 times expected 2023 EPS and 16.9 times estimated 2025 earnings of $3.91. The 2024 estimate is unavailable. The stock’s 52-week range is $53.69 to $77.35. TJX pays an annual dividend of $1.18 (yield of 1.6%). Total shareholder return for the past 12 months was 9.3%.
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Zim Integrated Shipping
Shares of Zim Integrated Shipping Inc. (NYSE: ZIM) have been on a roller-coaster for the past year. When the Israel-based container shipping firm reported fourth-quarter results in March, shares had gained more than 300% year over year. That gain dwindled to about 140% when first-quarter results were released in May. Now, six months later, shares have posted a 12-month loss of about 46%.
Zim’s dividend policy was changed for the second quarter and now comprises a distribution of approximately 30% (up from 20%) of net quarterly income in the first three quarters of the year. The annual dividend is expected to total 30% to 50% of the annual net income.
Of seven brokerages covering Zim, only one has a Buy rating, while five have Hold ratings and the other has a Strong Sell rating. At a share price of around $27.00, the stock trades at its median price target. At the high target of $80.00, the upside potential is 196%.
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For the company’s third quarter of fiscal 2022, the consensus revenue estimate is $3.16 billion, down 7.9% sequentially and up less than 1% year over year. Adjusted EPS are forecast at $9.39, down 15.1% sequentially and by 22.8% year over year. For the fiscal year, current estimates call for EPS of $40.07, up 2.6%, on sales of $12.69 billion, up by 18.3%.
Zim stock trades at 0.7 times expected 2022 EPS, 3.3 times estimated 2023 earnings of $8.13 and 8.9 times estimated 2024 earnings of $3.03 per share. The stock’s 52-week range is $22.34 to $91.23. The company pays an annual dividend of $27.10 (yield of 100.7%). Total shareholder return for the past year was negative 18.5%.
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