The three major U.S. equity indexes closed mixed on Thursday. The Dow Jones industrials ended the day down by 0.56%, the S&P 500 closed 0.09% lower and the Nasdaq was up 0.13%. Seven of 11 sectors closed lower, with financials (−0.71%) and consumer staples (−0.47%) falling the most. Communications services (0.29%) and health care (0.24%) posted the largest gains. Industrial stocks closed flat.
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Early Friday, the Bureau of Labor Statistics released its monthly report on nonfarm payrolls for November. Economists were expecting an increase of 200,000 new jobs, down from October’s total of 261,000. What they got was 263,000 new jobs and an increase in the October total to 284,000. The headline unemployment rate came in at 3.7%, unchanged from October, as expected. Markets are behaving as if this strong report could cause the Federal Reserve to rethink its recent pivot to smaller interest rate hikes. They might be right.

The three major indexes traded lower after Friday’s opening bell.

After U.S. markets closed Thursday, Marvell Technology reported lower-than-expected revenue and earnings per share (EPS). The chipmaker also lowered fourth-quarter guidance. Shares traded down about 8.6% shortly after regular trading opened.

ChargePoint also missed consensus estimates on both EPS and revenue. The good news is that revenue nearly doubled. The company also issued revenue guidance for the fourth quarter and the full fiscal year in line with expectations. The stock traded down by about 2.5% Friday morning.

UiPath posted a surprise profit and beat the consensus revenue estimate. Fourth-quarter guidance fell short of analysts’ consensus estimate, however. No matter, shares traded up about 9.5% Friday morning.

AMC Entertainment got a share price boost of 13% on Thursday thanks to retail options traders who could not get their hands on enough of the shares. The stock traded up another 1.9%.

As is most often the case, there are no notable earnings reports due Friday or first thing Monday morning. Here is a preview of three companies set to report quarterly results later on Monday or early on Tuesday.

AutoZone

Auto parts retailer AutoZone Inc. (NYSE: AZO) has added more than 36% to its share price over the past 12 months. The stock posted a new 52-week high on Thursday. The company reports quarterly results on Tuesday morning.
AutoZone in October authorized an additional $2.5 billion share repurchase, on top of a $2 billion program announced in March. Since fiscal 2018, AutoZone has cut the number of shares outstanding from around 27 million to around 20 million through share buybacks. Over the same period, the cost of stock-based compensation has risen from around $43.3 million to $70.6 million, and cash spent on stock repurchases for the period totals around $7.9 billion.

Of 24 analysts covering the stock, 16 have a Buy or Strong Buy rating and six more have Hold ratings. At a recent share price of around $2,553.00, the shares have outpaced the median price target of $2,475.00. At the high target of $2,850.00, the upside potential is 11.6%.

The revenue forecast for the company’s first quarter of fiscal 2023 is $3.86 billion, which would be down 27.9% sequentially but up 5.2% year over year. Adjusted EPS are forecast at $25.54, down 37.7% sequentially and 14.7% higher year over year. For the full fiscal year ending in August, analysts anticipate EPS of $124.10, up 5.9%, on sales of $16.25 billion, up 5%. Revenue and EPS are highly seasonal, with about 30% of revenue and more than 35% of EPS coming in the fourth quarter.

AutoZone stock trades at 20.6 times expected 2023 EPS, 17.8 times estimated 2024 earnings of $143.79 and 16.1 times estimated 2025 earnings of $158.61 per share. The stock’s 52-week trading range is $1,703.32 to $2,610.05. The company does not pay a dividend. Total shareholder return for the past year was 36.7%, including a buyback yield of 8.76%.

SAIC

Science Applications International Corp. (NYSE: SAIC) received 98% of its 2022 fiscal year revenue from federal government contracts. The company provides a variety of IT services to a number of federal agencies, including the military, NASA, the State Department and the Department of Homeland Security. The company reports quarterly results on Monday morning.

The National Defense Authorization Act for fiscal 2023 is currently stalled in the House and may be delayed until the new Congress is sworn in next year. The Senate version released in mid-October came in $44 billion above the Pentagon’s requested budget of $813.4 billion, and that gave SAIC (and other defense contractors) a share price boost.

There are 10 analyst ratings on SAIC’s stock, and just three of those are Buy or Strong Buy. At a share price of around $109.70, the stock has outrun its median price target of $99.00. At the high target of $120.00, the upside potential is about 8.6%.
For the third quarter of fiscal 2023, the consensus estimates call for revenue of $1.86 billion, up 1.7% sequentially but 2.1% lower year over year. SAIC is expected to post adjusted EPS of $1.73, down 1.4% sequentially and by 6.5% year over year. For the full fiscal year ending in January, the company is expected to report EPS of $7.08, down 2.6%, on sales of $7.53 billion, up 3.6%.

SAIC stock trades at 15.5 times expected 2023 EPS, 14.8 times estimated 2024 earnings of $7.43 and 13.6 times estimated 2025 earnings of $8.04 per share. The stock’s 52-week range is $78.10 to $113.03. SAIC pays an annual dividend of $1.48 (yield of 1.35%). Total shareholder return for the past year was 30.7%.

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Signet Jewelers

Signet Jewelers Ltd. (NYSE: SIG) is a global diamond jewelry retailer. Among its brands are Kay Jewelers, Zales and Jared, three of the four largest U.S. jewelers. The company operates nearly 2,900 stores and kiosks worldwide and is domiciled in Bermuda. Look for the company to report on Tuesday morning.

Shares have dropped by about 28% over the past 12 months, with virtually all the decline coming since inflation and the threat of recession became front-page news about six months ago. The good news for Signet is that there are 22 million U.S. millionaires who are “revenge spending,” according to Coresight Research, for all that time they were penned up by pandemic lockdowns.

There are just six analyst ratings on Signet’s stock, and only half of those are Buy ratings. At s share price of around $63.30, the stock’s upside potential based on a median price target of $75.50 is 19.3%. At the high target of $90.00, the upside potential is about 42.2%.

For the third quarter of fiscal 2023, the consensus estimates call for revenue of $1.51 billion, down 13.9% sequentially and by 1.9% year over year. Signet is expected to post adjusted EPS of $0.32, down 88.2% sequentially and 77.6% lower year over year. For the full fiscal year ending in January, the company is expected to report EPS of $10.93, down 11%, on sales of $7.79 billion, down 0.5%. Signet’s revenue and EPS are highly seasonal, with the January quarter registering about a third of annual revenue and about 45% of EPS.

Signet stock trades at 5.8 times expected 2023 EPS, 6.1 times estimated 2024 earnings of $10.31 and 6.2 times estimated 2025 earnings of $10.15 per share. The stock’s 52-week range is $48.30 to $98.67. SAIC pays an annual dividend of $0.80 (yield of 1.28%). Total shareholder return for the past year was negative 27.4%.

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