In late-morning trading on Wednesday, the Dow Jones industrials were flat, while the S&P 500 was down 0.58% and the Nasdaq 1.47% lower.
Before U.S. markets opened on Wednesday, Conagra beat consensus estimates on both the top and bottom lines. The packaged food giant also issued upside earnings guidance for the full 2023 fiscal year. Shares traded up about 1.1% Wednesday morning.
Before markets open on Thursday, Constellation Brands and Lamb Weston, which we mistakenly included in our preview for Wednesday afternoon, are set to report quarterly results. They are included again in this preview, along with one more company set to report results Thursday morning.
These are the last three earnings reports due out this week, partly due to a four-day week and partly due to the usual breather following the end of a quarter. U.S. markets are closed Friday to observe Good Friday.
Constellation Brands
Constellation Brands Inc. (NYSE: STZ) produces, imports and sells beer, wine, and spirits in the United States and other countries. With a market cap of around $40.3 billion, it is the country’s largest publicly traded alcoholic beverage stock. The shares have dropped about 5% of their value over the past 12 months, including a drop of 5.83% since the beginning of the year.
Last week the company announced a partnership with media company Tastemade to develop and produce a series for Tastemade’s streaming channel called “Street Somm” (that’s a pronounceable and spellable version of “sommelier”).
Of 27 analysts covering the company, 20 have a Buy or Strong Buy rating and the others have Hold rating. At a recent share price of around $218.20, the upside potential based on a median price target of $264.50 is 21.2%. At the high price target of $295.00, the upside potential rises to 35.2%.
Analysts expect Constellation to report fiscal 2023 fourth-quarter revenue of $2.02 billion, which would be down 17.3% sequentially and 3.8% lower year over year. Adjusted EPS are pegged at $1.84, down 35.0% sequentially and by 22.4% year over year. For the full fiscal year that ended in February, estimates call for EPS of $10.70, up by 4.9%, and revenue of $9.48 billion, up 7.4%.
Constellation stock trades at 21.1 times expected 2023 EPS, 19.1 times estimated 2024 earnings of $11.80 and 16.9 times estimated 2025 earnings of $13.30 per share. The stock’s 52-week trading range is $208.12 to $261.52. Constellation pays an annual dividend of $3.20 (yield of 1.42%). Total shareholder return for the past 12 months is negative 3.71%.
Lamb Weston
Lamb Weston Holdings Inc. (NYSE: LW) is the nation’s largest producer and marketer of frozen potato products and the ninth-largest packaged food company of any kind. The stock has risen by nearly 71% over the past 12 months.
In February, Lamb Weston acquired the 50% of a joint venture that it did not already own from Netherlands-based Meijer Frozen Foods for €525 million (about $572.5 million) and 1.95 million shares of Lamb Weston stock. The deal added production facilities to supply some 2 billion pounds of frozen products annually.
Of seven analysts covering the stock, five have a Buy or Strong Buy rating and one has a Hold rating. At a share price of around $104.20, the upside potential based on a median price target of $110.00 is about 6.2%. At the high price target of $115.00, the upside potential rises to 11%.
Analysts expect the company to report fiscal 2023 third-quarter revenue of $1.16 billion, down 17.3% sequentially but up 21.5% year over year. Adjusted EPS are pegged at $0.99, down 22.7% sequentially and 35.6% higher year over year. For the full fiscal year that ends in May, current estimates call for EPS of $3.94, up by 89.3%, and revenue of $5.15 billion, up 25.7%.
Lamb Weston stock trades at 26.5 times expected 2023 EPS, 23.1 times estimated 2024 earnings of $4.52 and 20.4 times estimated 2025 earnings of $5.10 per share. The stock’s 52-week range is $59.40 to $104.99, and the high was posted Monday. The company pays an annual dividend of $1.12 (yield of 1.07%). Total shareholder return for the past 12 months is 72.8%.
Levi Strauss
Apparel maker Levi Strauss & Co. (NYSE: LEVI) has seen its stock decline by 11% over the past 12 months. It posted a 52-week high one year ago. Since the beginning of the year, shares have added nearly 17%.
Late last month, the company stirred up a controversy over its decision to use AI-generated clothing models generated by Netherlands-based Lalaland.ai beginning later this year. The company said that the digital models would increase the number and diversity of models on its e-commerce site. Levi Strauss was forced to clarify its announcement after getting some serious backlash on social media.
Analysts remain modestly bullish on the stock, with 16 of 12 rating the shares at Buy or Strong Buy and six more having Hold ratings. The median price target of $19.00 is less than $1.00 higher than the current trading price near $18.12, implying a potential upside of 4.63%. At the high price target of $24.00, the implied upside is about 32.5%.
For the first quarter of fiscal 2023, analysts are forecasting sales of $1.61 billion, up 1.63% sequentially and by 1.25% year over year. Adjusted EPS are forecast at $0.33, down 3.5% sequentially and 28.3% lower year over year. For the full fiscal year ending next February, analysts currently expect EPS of $1.33, down 11.5%, on sales of $6.31 billion, up 2.3%.
Levi stock trades at 13.7 times expected 2023 EPS, 11.9 times estimated 2024 earnings of $1.53 and 10.8 times estimated 2025 earnings of $1.68 per share. The stock’s 52-week range is $13.57 to $20.50. Levi Strauss pays an annual dividend of $0.48 (yield of 2.63%). Total shareholder return for the past year is negative 8.66%.
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