In the first half-hour of Monday trading, the Dow Jones industrials were up 0.68% and the S&P 500 was up 0.21%, but the Nasdaq was down 0.45%.
Before U.S. markets opened, Foot Locker handily beat consensus fourth-quarter estimates for earnings per share (EPS) and revenue. Same-store sales rose by 4.2% in the quarter. The less-good news was the downside guidance for the 2024 fiscal year. Foot Locker sees EPS of $3.35 to $3.65, compared to a consensus estimate of $4.08, and revenue down 3.5% to 5.5% year over year, in line with expectations. Shares traded up 4.5% early Monday.
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PDD (Pinduoduo) missed consensus estimates on both the top and bottom lines. The discount e-commerce company blamed weak consumer spending. Shares traded down about 14.5%.
Before U.S. markets open on Tuesday morning, Tencent Music will report quarterly results.
Here is a preview of what to expect when the following three companies report results on Monday and Tuesday.
Array Technologies
Albuquerque-based Array Technologies Inc. (NASDAQ: ARRY) makes and sells the hardware and software that allows solar arrays and panels to track the sun. Over the past year, the stock has increased its value by about 37%. When the company announced preliminary results for the quarter earlier this month, shares jumped 15%. Since then, the stock is down about 21.5%, likely due to macroeconomic headwinds that could curb solar generation investments.
Of 19 brokerages covering the stock, 14 have a Buy or Strong Buy rating and four more have Hold ratings. At a recent share price of around $17.00, the stock trades above its median price target of $18.00. At the high target of $36.00, the upside potential is 111.8%.
Fourth-quarter revenue is forecast at $363.86 million, which would be down 29.4% sequentially but up 65.5% year over year. The company is expected to post adjusted EPS of $0.07, down 59.2% sequentially and up from a loss of $0.06 per share in the year-ago quarter. For the 2022 fiscal year that ended in December, the company is forecast to post EPS of $0.35, up 404% year over year, on revenue of $1.6 billion, up 87.7%.
The stock trades at 48.3 times expected 2022 EPS, 20.9 times estimated 2023 earnings of $0.82 and 13.6 times estimated 2024 earnings of $1.26 per share. The stock’s 52-week trading range is $5.45 to $24.59. Array Technologies does not pay a dividend, and the total shareholder return for the past year was 36.23%.
GameStop
Video gaming retailer GameStop Corp. (NYSE: GME) has watched its share price fall by more than 24% over the past 12 months. Over the past six months, the stock is down about 42%, including a drop of 10% so far in 2023. In early February, the stock jumped by 45% as meme stock fever struck again. The fever finally broke about a week later and shares have been sinking ever since. GameStop shares periodically bounce higher when the fever returns, but there is little about the company’s business to support any lasting improvement in the stock price.
Just two analysts have anything to say on GameStop stock. One has a Sell rating and the other has a Hold rating. At a share price of around $16.60, the stock trades above its median price target of $12.65. At the high target of $20.00, the upside potential is 21%. Nearly 22% of GameStop’s shares are sold short, and the current borrow fee is above 16%.
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Fourth-quarter revenue is forecast at $2.18 billion, up 83.8% sequentially but 3.1% lower year over year. Analysts expect GameStop to report an adjusted loss per share of $0.13, compared to the prior quarter’s loss of $0.31 and the year-ago loss of $0.47. For the full 2023 fiscal year that ended in January, analysts forecast an adjusted loss per share of $1.31 compared to the prior-year loss of $1.14 per share, and sales of $5.88 billion, down 2.2%.
GameStop is not expected to post a profit in fiscal 2023, 2024 or 2025. Based on estimates of GameStop’s sales ranging between $5.55 billion and $5.88 billion for the three fiscal years, the enterprise value to sales multiple is 0.8. The stock’s 52-week range is $15.41 to $49.85. GameStop does not pay a dividend, and the total shareholder return for the past year was negative 24.29%.
Nike
Over the past 12 months, shares of athletic gear maker Nike Inc. (NYSE: NKE) have declined by about 5.5%. For the year to date, the Dow component is the 10th-best performer, up 2.89%, but down 13.9% since its 52-week high posted almost a full year ago. Nike faces a challenge from Skechers as America’s favorite casual footwear, largely due to a significant price difference. Nike also has to regain the affection of Chinese consumers after the long lockdowns in the country. It will be competing with Skechers (again) and other U.S. brands, like Starbucks, for Chinese yuan.
Of 39 brokerages covering the stock, 25 rate the shares at Buy or Strong Buy. Thirteen more have a Hold rating. At a price of around $120.40 a share, the upside potential based on a median price target of $133.00 is about 10.5%. At the high price target of $185.00, the implied upside is 53.7%.
For the company’s third quarter of fiscal 2023, revenue is expected to come in at $11.48 billion, down 13.8% sequentially but 5.6% higher year over year. Adjusted EPS are forecast at $0.55, down 35.8% sequentially and down 36.8% year over year. For the full 2023 fiscal year ending in May, current estimates call for EPS of $3.14, down 26.3%, on sales of $50.05 billion, up about 7.2%.
Nike stock trades at 38.3 times expected 2023 EPS, 30.5 times estimated 2024 earnings of $3.95 and 25.4 times estimated 2025 earnings of $4.75 per share. The stock’s 52-week range is $82.22 to $139.86. Nike pays an annual dividend of $1.36 (yield of 1.15%). Total shareholder return for the past year was negative 4.44%.
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