The three major U.S. equity indexes closed lower Monday. The Dow Jones industrials ended the day down by 1.4%, the S&P 500 closed 1.79% lower and the Nasdaq retreated 1.93%. All 11 sectors closed lower, with consumer cyclicals (−2.95%) and energy (−2.94%) falling the most. Utilities (−0.6%) and health care (−0.99%) posted the smallest losses.
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On Monday, the Institute for Supply Management (ISM) reported that its non-manufacturing index for November rose to 56.5%, up from 54.4% in October and well above the 53.5% consensus estimate from economists. The report raised concerns that the Fed’s interest rate hikes would need to remain higher for longer. On Friday, the Bureau of Labor Statistics will issue its report on the producer price index (PPI) for November. Economists expect the index to rise by 0.2%, as it did in October. Core PPI is expected to rise by 0.2%, compared to no month-over-month increase in October.

The three major indexes traded lower Tuesday morning.

Before markets opened on Monday, AutoZone beat the consensus adjusted earnings per share (EPS) estimate by nearly 10% and the revenue estimate by more than 11%. Same-store sales rose by 5.6%. Shares traded down by about 1.6%.

Signet Jewelers also beat estimates on both the top and bottom lines. The company issued downside revenue guidance for its fourth quarter and full-year EPS guidance that was above estimates and in line with revenue estimates. Shares traded up by more than 15%.

After markets close Tuesday, MongoDB, SentinelOne, Stitch Fix and Toll Brothers are expected to report quarterly results. Look for Academy Sports and Campbell Soup to post their results first thing Wednesday morning.

Here is a preview of three companies set to reveal quarterly results late Wednesday or early Thursday.

Ciena

Network hardware and software maker Ciena Corp. (NYSE: CIEN) reports fourth-quarter fiscal 2021 results Thursday morning. Over the past 12 months, Ciena’s stock has dropped by more than 26%. For the quarter to date, however, shares are up more than 11%.

Ciena has been plagued with supply chain issues. In the fourth quarter of last year, Ciena posted more than $1 billion in revenue for the first time in the company’s 30-year history. It has fallen short in all three quarters so far this fiscal year, but analysts have it back on track to reach that amount again in the July quarter.

Analysts are solidly bullish on the stock, with 14 of 18 having a rating of Buy or Strong Buy. The rest have Hold ratings. At a recent price of around $45.00 a share, the upside potential based on a median price target of $57.00 is 26.7%. At the high price target of $71.00, the upside potential is 57.8%.

For the company’s fourth quarter of fiscal 2022, analysts have forecast revenue of $847.51 million, which would be down 2.4% sequentially and by 18.5% year over year. Adjusted EPS are forecast at $0.07, down 77.5% sequentially and 91.8% lower year over year. For the full 2022 fiscal year, Ciena is expected to report EPS of $1.38, down 52.7%, on sales of $3.51 billion, down 3.0%.

Ciena stock trades at 32.7 times expected 2022 EPS, 17.5 times estimated 2023 earnings of $2.57 and 12.9 times estimated 2024 earnings of $3.50 per share. The stock’s 52-week trading range is $38.33 to $78.28. The company does not pay a dividend, and total shareholder return for the past year was negative 26.4%.

Apparel retailer Express Inc. (NYSE: EXPR) has seen its share price fall by 61% over the past 12 months. Last week, the company announced a refinancing that reduced the interest rate on its $290 million revolving credit facility and its $90 million term loan. The refinancing deal boosted the company’s access to liquidity, helped the balance sheet and improved its capital structure. All were sorely needed. Express reports quarterly results early Thursday.
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The stock gets little coverage from brokerage houses. Just two have ratings and they are evenly split between Buy and Hold. At a share price of around $1.35, the implied upside based on a median price target of $5.50 is more than 300%.

For the third quarter of fiscal 2023, Express is expected to report revenue of $451.77 million, down 2.8% sequentially and 4.2% lower year over year. Analysts expect an adjusted loss per share of $0.29, compared to EPS of $0.10 in the prior quarter and EPS of $0.11 in the year-ago quarter. For the full fiscal year ending in January, the loss per share is forecast at $0.17, better than the loss per share of $0.23 in fiscal 2022. Sales for the year are forecast to rise by 4.4% to $1.95 billion.

The multiple to estimated 2024 EPS is 10.8. No other estimates are available. The stock’s 52-week range is $1.04 to $4.93, and Express does not pay a dividend. Total shareholder return in the past year was negative 61.1%.

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GameStop

Video gaming retailer GameStop Corp. (NYSE: GME) has watched its share price fall by more than 38% over the past 12 months. It has been worse. In mid-March, the stock traded down by nearly 55%. Shares received some of that old meme-stock action following that March plunge but have only been able to hang on to a small portion of it. GameStop reports quarterly results on Tuesday afternoon.

On Monday, CEO Matt Furlong notified staff that the company was firing an unspecified number of employees, including many software engineers working on the company’s blockchain wallet. Now may not be the best time to deepen the company’s involvement in the cryptosphere.

Just two analysts have had anything to say on the stock. One has a Sell rating and the other has a Hold rating. At a share price of around $25.50, the stock trades well above its median price target of $16.00. At the high target of $26.00, the upside potential is nearly 2%. More than 21% of GameStop’s shares are sold short, and the current borrow fee is around 7.5%.

Third-quarter revenue is forecast at $1.35 billion, up 19.3% sequentially and by 3.8% year over year. Analysts expect GameStop to report an adjusted loss per share of $0.44, compared to the prior quarter’s loss of $0.52 and the year-ago loss of $0.28, less than the $0.35 per-share loss posted in both the prior and year-ago quarters. For the full 2023 fiscal year ending in January, analysts forecast an adjusted loss per share of $1.37 compared to the prior-year loss of $1.14 per share, and sales of $6.27 billion, up 4.3%.

GameStop is not expected to post a profit in either fiscal 2023 or 2024. Based on estimates of GameStop’s enterprise value ranging between $6.5 billion and $6.7 billion for the two fiscal years, the enterprise value to sales multiple is around 1.2. The stock’s 52-week range is $19.39 to $49.85, and GameStop does not pay a dividend. Total shareholder return for the past year was negative 38.8%.

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