U.S. markets are closed Monday in observance of the Memorial Day holiday. On Friday, the Dow Jones industrials closed up 1.0%, the S&P 500 closed up 1.3% and the Nasdaq closed 2.19% higher.
After U.S. markets closed Thursday, Marvell Technology reported slight beats on earnings per share (EPS) and revenue but raised the stakes by talking up its future. The story it told followed the pattern set Wednesday by Nvidia, and it appears to be working again. Marvell’s stock closed on Friday with a gain of 32.4%.
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Gap posted EPS of $0.01, while analysts had anticipated a loss of $0.16 per share. Quarterly revenue was about flat, and same-store sales declined in all the company’s segments except Gap Stores, where they improved by 1%. Investors must have expected much worse because the shares closed up 12.4% Friday.
Costco reported better-than-expected EPS but missed the revenue forecast by about 1.7%. Same-store sales rose by 3.5%, but that is a weak showing by Costco standards. Traffic growth was solid, although shoppers were not buying the store’s big-ticket items. Shares posted a gain of 4.26% Friday.
Before markets opened on Friday, PDD (Pinduoduo) absolutely hammered the consensus EPS and revenue estimates. Revenue was up more than 58% year over year. Shares closed 18.66% higher on Friday.
There are no notable earnings reports scheduled for release on Tuesday morning. Reports from the three of the following companies are due after markets close on Tuesday, and one is on deck early Wednesday.
Box
Box Inc. (NYSE: BOX) provides a cloud content management platform that allows businesses and organizations to share content from anywhere on any device. The stock posted its all-time high in early February but sank quickly after the company announced that its cost would rise this year as it moves its operations to the public cloud and gives up its in-house cloud infrastructure.
24/7 Wall St.In early May, the company announced a partnership with OpenAI to develop tools for Box’s platform. The stock has added 6% since then, roughly equal to its share-price gain over the past 12 months. At least the company was able to read the writing on the wall. Box reports results after markets close on Tuesday.
Analysts remain mostly bullish on Box stock, with 10 of 14 having a Buy or Strong Buy rating. At a recent price of around $27.60 a share, the upside potential based on a consensus price target of $34.00 is 23.2%. At the high target of $39.00, the implied gain is 41.3%.
For the company’s first quarter of fiscal 2024, analysts expect revenue of $249.33 million, which would be down 2.8% sequentially but up 4.6% year over year. Adjusted EPS are forecast at $0.27, down 25.8% sequentially and up 17.4% year over year. For the full 2024 fiscal year ending in January, the EPS estimate is $1.44, up 20.3%, on sales of $1.06 billion, up 6.5%.
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Box shares trade at 19.1 times expected 2024 earnings, 15.4 times estimated 2025 earnings of $1.79 and estimated 2026 earnings of $2.18 per share. Their 52-week trading range is $22.31 to $34.68. The company does not pay a dividend, and total shareholder return for the past year was 5.83%.
Frontline
Frontline Ltd. (NYSE: FRO) operates a fleet of about 70 tankers transporting crude oil and refined products worldwide. The stock has risen by 42.1% over the past 12 months, including a jump of 23% since the beginning of the year. Frontline reports quarterly results first thing Wednesday morning.
Like other seaborne shipping firms, Frontline pays a high dividend, currently comprised of a $0.30 per share quarterly payout and a variable portion depending on profitability. The company paid a total quarterly dividend of $1.07 per share for the December quarter.
Of just six analysts covering the company, half have a Buy or Strong Buy rating. At a share price of nearly $15.00, the potential upside based on a median price target of $18.00 is 20%. At the high price target of $23.00, the upside potential is 53.3%.
First-quarter revenue is forecast at $246.96 million, down 1.7% sequentially but 234.2% higher year over year. Analysts expect adjusted EPS of $0.82 per share, down 15.1% sequentially but up 214.2% year over year. For the 2023 fiscal year, Frontline is expected to report EPS of $2.48, up 57%, on revenue of $4.07 billion, up 30%.
Frontline stock trades at 6.0 times expected 2023 EPS, 6.6 times estimated 2024 earnings of $2.25 and 5.7 times estimated 2025 earnings of $2.64 per share. Frontline’s 52-week trading range is $7.51 to $19.29. The company’s forward dividend is estimated at $4.28 (yield of 29.95%), and total shareholder return for the past year was 53.35%.
Hewlett Packard Enterprise
Enterprise-level hardware and software maker Hewlett Packard Enterprise Co. (NYSE: HPE) has seen its share price decline by about 0.3% over the past 12 months. Since the beginning of the year, shares have dropped by about 6.8%, despite a solid beat on revenue and profits in the first quarter. The company even raised guidance. The company reports results after Tuesday’s closing bell.
At the time, HPE said it plans to offer a cloud-based supercomputing service for training AI large learning models, and the company had better be prepared to tout progress and future expansion. Otherwise, investors could get jumpy.
Analyst sentiment is hardly bullish on HPE stock, with 11 of 21 brokerages having a Hold rating and with Buy or Strong Buy ratings. At a share price of around $15.00, the upside potential based on a median price target of $17.00 is 13.3%. At the high target of $20.00, the upside potential is 25%.
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For the company’s second quarter of fiscal 2023, analysts expect to see revenue of $7.31 billion, down 6.4% sequentially but 6.9% higher year over year. Adjusted EPS are forecast at $0.48, down 23.2% sequentially and up 9.1% year over year. For the fiscal year ending in October, analysts are looking for adjusted EPS of $2.07, up 2.4%, on sales of $29.94 billion, up 5.1%.
Hewlett Packard Enterprise stock trades at 7.2 times expected 2023 EPS, 7.0 times estimated 2024 earnings of $2.15 and 6.4 times estimated 2025 earnings of $2.34 per share. Its 52-week range is $11.90 to $17.25, and the company pays an annual dividend of $0.48 (yield of 3.39%). Total shareholder return over the past year is 3.49%.
HP
Personal computer and printer maker HP Inc. (NYSE: HPQ) has lost about 13% from its share price over the past 12 months, though the stock has gained more than 15% so far in 2023. Revenue and profit estimates for the April quarter and the full 2023 fiscal year reflect the continuing decline in PC demand. The bar has not been set terribly high; HP had better be able to clear it. HP reports results after markets close on Tuesday.
Analysts remain cautious on the stock. Of 16 brokerages covering HP, 11 have Hold ratings, while just one has a Strong Buy rating and two more rate the stock at Buy. At a share price of around $31.00, the stock is trading above its median price target of $30.00. At the high price target of $35.00, the upside potential is 12.9%.
Revenue in the company’s second quarter of fiscal 2023 is forecast to come in at $13.05 billion, down 5.6% sequentially and by nearly 21% year over year. Adjusted EPS are forecast at $0.76, up 1.0% sequentially but down 29.6% year over year. For the full fiscal year ending in October, analysts forecast EPS of $3.34, down 18.2%, on sales of $55.18 billion, down 12.4%.
HP stock trades at 9.3 times expected 2023 EPS, 8.7 times estimated 2024 earnings of $3.57 and 8.2 times estimated 2025 earnings of $3.77 per share. The 52-week range is $24.07 to $40.79. HP pays an annual dividend of $1.05 (yield of 3.42%). Total shareholder return for the past year is negative 9.85%.
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