Investing

Earnings Previews: ChargePoint, Lululemon

Paul Ausick

Published: May 31, 2023 11:08 am

Early Wednesday, the Dow Jones industrials were down 0.87%, the S&P 500 down 0.84% and the Nasdaq down 0.72%.

After U.S. markets closed on Tuesday, Box reported better-than-expected results on both the top and bottom lines. Second-quarter guidance was slightly above the consensus estimates, and full-year guidance was in line with expectations. Shares traded up by 1.9%.
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HP missed the consensus revenue but posted a beat on earnings per share (EPS). Revenue fell 21% year over year, and PC revenue tumbled by 29% and volume fell by 28%. Guidance for the current quarter and the full fiscal year were in line with expectations. The stock traded down 3.0% Wednesday morning.

Hewlett Packard Enterprise also posted better-than-expected EPS while missing on revenue. Investors did not appear to be in a congenial mood, however, as shares traded down 6.9%.

Before markets opened on Wednesday, Frontline reported revenue and EPS above analysts’ estimates. The oil shipper expects demand for oil to rise by about 3 million barrels a day in the second half of this year. That is not out of the question, but not a slam dunk either. Shares traded down 5.1%.

After U.S. markets close on Wednesday, C3.ai, CrowdStrike, Nordstrom and Salesforce are expected to report quarterly results. Then look for reports from Bilibili, Dollar General and Macy’s the following morning. Later on Thursday, Broadcom, Dell, and SentinelOne step into the earnings spotlight.

Here is a preview of two more companies reporting quarterly results after markets close on Thursday.

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ChargePoint

Electric vehicle (EV) charging network provider ChargePoint Holdings Inc. (NYSE: CHPT) tacked on a 14% share price boost on Tuesday, following an upgrade from Neutral to Buy at BofA, along with a lowered price target of $14 (down from $15.50).

The proposed buildout of charging stations included in the ill-named Inflation Reduction Act has not had as much of an impact on ChargePoint’s positive prospects as did Tesla’s opening of its charging stations to all EVs. What the company has to say about its near-term prospects is likely to have a greater effect on investors than the actual quarterly numbers being showcased.

Analysts remain bullish on the stock, with 14 of 19 brokerages having a Buy or Strong Buy rating and the other five rating it at Hold. At a recent share price of around $9.50, the stock’s implied upside based on a median price target of $15.50 is 63.2%. At the high price target of $26.00, the implied upside is about 70.3%.
Revenue is forecast to reach $129.36 million for the first quarter of fiscal 2024, which would be down 16.0% sequentially but up 57.2% year over year. Analysts expect a loss per share of $0.17, compared to a loss per share of $0.13 in the prior period and a loss of $0.21 in the year-ago quarter. For the full 2024 fiscal year that ends in January, ChargePoint is expected to post a loss per share of $0.49, better than the prior year’s per-share loss of $0.69. Forecast full-year revenue of $705.26 million is up 50.7% year over year.
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The company is not expected to post a profit in 2024 or 2025. The price multiple for 2026 is 68.0, based on an earnings estimate of $0.14 per share. The stock’s 52-week trading range is $7.82 to $19.92, and the company does not pay a dividend. The total shareholder return for the past year was negative 30.22%.

Lululemon

Lululemon Athletica Inc. (NASDAQ: LULU) has posted a share price increase of about 12.4% over the past 12 months. The stock’s 52-week high was posted in early May, but shares have dropped 13% in the past two weeks.

One possible explanation was that duplicate products (“dupes”) were being pushed on TikTok and cutting into Lululemon’s sales and high margins. The company responded with a dupe swap at a Los Angeles store where customers with dupe Align pants could swap them for the real thing. And now, the company’s answer to the boomer generation fanny pack, the “Everywhere Belt Bag,” is back in stock and, well, everywhere–and it only costs $38. Sales of the bag soared when TikTok influencers reported earlier this year that it was one of the year’s most popular products during the first quarter.

Of 32 brokerages covering the company, 22 have a Buy or Strong Buy rating and six more have Hold ratings. At a share price of $331.00, the upside potential based on a median price target of $410.73 is 24.1%. At the high price target of $525.00, the upside potential is 58.6%.

First-quarter fiscal 2024 revenue is forecast at $1.92 billion, down 30.6% sequentially but up 19.3% year over year. Adjusted EPS are forecast at $1.98, down 55.1% sequentially and 33.8% higher year over year. For the full fiscal year that ends in January, analysts expect Lululemon to report EPS of $11.60, up 15.2%, on sales of $9.36 billion, up 15.5%.

Lululemon stock trades at 28.5 times expected 2024 EPS, 24.7 times estimated 2025 earnings of $13.42 and 21.2 times estimated 2026 earnings of $15.59 per share. Its 52-week range is $258.79 to $389.06. The company does not pay a dividend. Total shareholder return for the past year was 12.77%.