Investing

Earnings Previews: Alibaba, Bath & Body Works, KE Holdings

Paul Ausick

Published: May 16, 2023 12:31 pm

In the noon hour on Tuesday, the Dow Jones industrials were down 0.6% and the S&P 500 down 0.24%, while the Nasdaq traded 0.25% higher.

After U.S. markets closed on Monday, Canoo reported a smaller-than-expected adjusted loss per share and, as expected, reported no revenue. The company reported $69.7 million in cash and equivalents as of Monday and projected second-quarter operating expenses of $40 to $60 million and capital expenditures of $10 million to $20 million. Shares traded up 0.67% Tuesday.

Nu Holdings handily beat the consensus earnings per share (EPS) and revenue estimates. According to Monday’s Form 13-F filing, Berkshire Hathaway maintained its stake of about 107 million shares in Nu Holdings. Shares of the Brazilian fintech firm traded up by less than 1%.

Before U.S. markets opened on Tuesday, Home Depot beat the consensus EPS estimate by a penny and missed on revenue. Sales were 4.2% below the year-ago quarter’s level. Home Depot also issued downside fiscal-year EPS and revenue guidance. Same-store sales are expected to decline by 2% to 5%. Shares traded down 1.7%.

iQIYI just beat the consensus revenue estimate and met the adjusted EPS estimate. The stock traded down 8.1%.

Sea Limited reported a big miss on the consensus EPS estimate and revenue that was higher than expected. Revenue increased by 4.9% year over year. Shares traded down 15.9%.

Tencent Music beat estimates on both the top and bottom lines. Shares traded down 3.6% nonetheless.

After U.S. markets close on Tuesday or before they open on Wednesday, Kyndryl, Star Bulk Carriers, Target and TJX Companies are scheduled to report quarterly results. Look for Cisco and SQM to report later on Wednesday.

Walmart reports first-quarter results first thing Thursday morning, along with these three companies.

Alibaba

Over the past 12 months, shares of Alibaba Group Holding Ltd. (NYSE: BABA) traded essentially flat with plenty of big swings. But over the past two years, shares have dropped about 57% of their value. Aside from the country’s strict lockdown rules that were not repealed until early this year, the company managed to get sideways with the Chinese government, and that is never a good thing. The holding company has announced a six-piece split of its individual companies that could unlock some value, along with calling a halt to government fears that the e-commerce giant is getting too big.

Of 46 analysts covering the stock, 43 have ratings of Buy or Strong Buy. The others rate it at Hold. At a recent price of around $88.00 a share, the upside potential based on a median price target of $143.90 is about 73.8%. At the high price target of $217.73, the upside potential is 147.4%.

For Alibaba’s fourth quarter of fiscal 2023, analysts are expecting revenue of $30.05 billion, which would be down 16.3% sequentially and by 6.6% year over year. Adjusted EPS are expected to come in at $1.36, down 51.2% sequentially but 8.8% higher year over year. For the full fiscal year that ended in March, Alibaba is expected to report EPS of $7.61, down 8.40%, on sales of $125.02 billion, down 7.1%.

Alibaba shares trade at 11.6 times expected 2023 EPS, 10.2 times estimated 2024 earnings of $8.63 and 9.0 times estimated 2025 earnings of $9.81 per share. The stock’s 52-week trading range is $58.01 to $125.84. The company does not pay a dividend, and total shareholder return for the past 12 months is 2.10%.

Bath & Body Works

Over the past 12 months, Bath & Body Works Inc. (NYSE: BBWI) stock has dropped by about 31.4%. Since the company split off from Victoria’s Secret and was renamed in early August of 2021, its stock is down about 47%. The company operates about 1,750 company-owned locations and 338 franchised locations worldwide under brand names Bath & Body Works, White Barn, C.O. Bigelow and others. A new line of products for men hit the shelves on Monday, with hopes of continuing the company’s growth in its male customer base.

Of 20 analysts covering the firm, 12 have a Buy or Strong Buy rating and the others rate it at Hold. At a trading price of around $33.00, the upside potential based on a median price target of $48.00 is 45.5%. At the high price target of $78.00, the upside potential is 136.4%.

Analysts have forecast revenue at $1.39, down 51.8% sequentially and by 4.1% year over year. EPS are pegged at $0.26, down 86.2% sequentially and 59.4% lower year over year. For the full fiscal year ending in January of 2024, analysts estimate EPS of $2.97, down 12.7% on sales of $7.5 billion, down 0.8%.

Bath & Body Works stock trades at 11.1 times expected 2024 earnings, 9.1 times estimated 2025 earnings of $3.60 and 7.8 times estimated 2026 earnings of $4.24 per share. Its 52-week range is $25.75 to $50.78, and the company pays an annual dividend of $0.80 (yield of 2.42%). Total shareholder return for the past year was negative 30.59%.

KE Holdings

KE Holdings Inc. (NYSE: BEKE) is a Beijing-based online real estate brokerage. The share price is up about 32% over the past 12 months, but since mid-February, the stock is down 16.8%. Chinese real estate has had its ups and downs since the government lifted its strict lockdowns. Most recently, the market has turned from up to down again. People are reluctant to get a mortgage, cutting into sales. China’s property sector accounts for 20% of national gross domestic product, so this is a real stumbling block for a recovering economy.

Of 21 analysts covering the stock, 20 have a Buy or Strong Buy rating and the other has a Hold rating. At a share price of around $16.50, the implied upside based on a median price target of $24.74 is about 50.5%. At the high price target of $30.56, the upside potential is 85.2%.

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Analysts expect KE Holdings to report first-quarter 2023 revenue of $2.53 billion, up 4.2% sequentially and by 27.8% year over year. EPS are pegged to come in at $0.25, nearly 33% higher sequentially and up from a break-even finish in the year-ago quarter. For the full 2023 fiscal year, EPS are forecast at $0.73, up 111.6%, on sales of $10.67 billion, up 21.3% year over year.

KE Holdings stock trades at 22.6 times expected 2023 EPS, 17.8 times estimated 2024 earnings of $0.0.93 and 16.2 times estimated 2025 earnings of $1.02 per share. Its 52-week range is $9.09 to $21.08, and the company does not pay a dividend. Total shareholder return over the past year is 36.05%.