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Earnings Previews: Cisco Systems, Sociedad Química y Minera de Chile (SQM)
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In early trading on Tuesday, the Dow Jones industrials were down 0.21% and the S&P 500 down 0.05%, but the Nasdaq was 0.02% higher.
After U.S. markets closed 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 nearly 19% early Tuesday.
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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 6%.
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 2.5%.
iQIYI just beat the consensus revenue estimate and met the adjusted EPS estimate. The stock traded down 7.4%.
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 more than 13%.
Tencent Music beat estimates on both the top and bottom lines. Shares traded down 8.5% 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.
24/7 Wall St.Here is a look at two companies scheduled to report results after markets close on Wednesday.
Cisco Systems
Networking giant and Dow component Cisco Systems Inc. (NASDAQ: CSCO) has posted a share price decline of almost 5% over the past 12 months. Since registering a new 52-week low in mid-October, the stock is up about 17.8%, including a 52-week high in late April. CEO Chuck Robbins said last week that Cisco will begin manufacturing in India, spending $1 billion in the country over the next few years. Institutional investors hold about 75% of the company’s stock, largely due to its solid dividend yield.
Analysts remain mildly bullish on the stock, with 11 of 26 having a Buy or Strong Buy rating and 15 more with Hold ratings. At a recent price of around $47.10 a share, the upside potential based on a median price target of $56.00 is 18.9%. At the high price target of $73.00, the upside potential is nearly 55%.
For Cisco’s third quarter of fiscal 2023, analysts expect revenue of $14.36 billion, which would be an increase of 5.6% sequentially and up 11.8% year over year. Adjusted EPS are forecast at $0.97, up about 10.1% sequentially and by 11.5% year over year. For the full fiscal year ending in July, analysts estimate EPS of $3.75, up 11.6%, on revenue of $56.51 billion, up 9.6%.
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Cisco’s stock trades at 12.6 times expected 2023 EPS, 11.7 times estimated 2024 earnings of $4.03 and 11.2 times estimated 2025 earnings of $4.20 per share. Its 52-week trading range is $38.60 to $52.56. Cisco pays an annual dividend of $1.56 (yield of 3.34%). Total shareholder return over the past year was negative 1.71%.
Sociedad Química y Minera de Chile (SQM)
Sociedad Química y Minera de Chile S.A. (NYSE: SQM) is a specialty chemicals company that produces a variety of raw materials, including lithium. SQM, as it is commonly known, had more than doubled its share price in the 12 months to late May of last year, but since then, the stock has dropped 30%. The price of lithium has dropped by more than 60% over the same period.
SQM’s stock dropped 18% in one day late last month after the government announced a new plan to create a state-owned lithium company to develop Chile’s vast lithium resources. The state company will take a majority stake in private companies involved in “the entire productive process” of lithium. Shares have bounced back to recover more than half that loss, as lithium prices also have begun rising (slightly) again.
Of 16 brokerages covering the stock, 10 have a Buy or Strong Buy rating and five have Hold ratings. At a share price of around $73.40, the implied upside to a median price target of $93.50 is 27.5%. Based on the high price target of $136.00, the upside potential is 86%.
24/7 Wall St.First-quarter revenue is forecast at $2.43 billion, down 22.3% sequentially but up 20.3% year over year. Adjusted EPS are forecast at $3.01, down 25.2% sequentially and by 8.3% year over year. For the full 2023 fiscal year, analysts expect SQM to report EPS of $11.64, down nearly 15%, on sales of $9.62 billion, down 10.2%.
SQM stock trades at 6.3 times expected 2023 EPS, 7.0 times estimated 2024 earnings of $10.46 and 8.3 times estimated 2025 earnings of $8.80 per share. Its 52-week range is $60.21 to $115.76. The company pays an annual (variable) dividend of $10.84 (yield of 14.77%). Total shareholder return over the past year was negative 4.83%.
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