This month is the heart of the current earnings season, and Wednesday is no exception. More than 120 publicly traded companies are scheduled to report earnings this week, with more than 450 issuing results by the end of the week.
We have previews on three major reports scheduled for release Wednesday afternoon and a couple of interesting reports due before markets open Thursday morning.
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eBay
First up after markets close on Wednesday is eBay Inc. (NASDAQ: EBAY). The company’s stock added about 41% last year and has jumped more than 15% more in 2021. The online auction house and marketplace claims 183 million active buyers and a gross profit margin of 77%. Some of that growth is due to the COVID-19 pandemic, and part is due to new features such as letting sellers advertise their own listings. eBay has also launched its own managed payments feature that could boost revenues and profits going forward.
Since the beginning of the year, Deutsche Bank has downgraded the shares from Buy to Hold and maintained a price target of $59, while Morgan Stanley has maintained an Equal Weight rating and boosted its price target by a dollar to $58.
Analysts expect the company to report fourth-quarter earnings per share (EPS) of $0.83, up nearly 26% year over year, on revenue of $2.7 billion, down about 3% from the prior-year quarter. For the full fiscal year, estimates call for EPS $3.39 on sales of $10.1 billion. Those estimates represent an increase of 48% in EPS and a decline of 5.7% in revenue.
The stock trades at about 17 times expected 2020 EPS and about 16 times expected 2021 earnings. Shares traded down about 0.5% at $58.20 Tuesday morning, in a 52-week range of $26.02 to $61.06. The consensus price target on the stock is $62.71, and eBay pays a dividend yield of 1.13%.
PayPal
PayPal Holdings Inc. (NASDAQ: PYPL) saw its stock add about 116% in 2020, with shares up about 4% so far in 2021. The company is the largest digital payments platform in the United States, and it has a strong record of sales and earnings growth that was barely dented by the pandemic. Since being spun out of eBay in 2015, the stock has appreciated by more than 565%.
It’s hard to find an analyst that doesn’t have a Buy rating on the stock. Since December, only one of 12 ratings has been Neutral. The company’s Venmo person-to-person payment system and newly created Venmo credit card are likely to contribute to a continuation of PayPal’s success.
Analysts are looking for quarterly EPS of $1.00 on sales of $6.09 billion, increases of 16% and 23%, respectively, over the same period a year ago. Full-year EPS is expected to total $3.80, up 22.5% year over year, and sales are projected to reach $21.4 billion, up nearly 21%.
At a recent price of around $245.60, the potential gain on PayPal stock is 4.2% at the consensus price target of $56.07. At the high price target of $350, the potential upside is 42.5%. The stock is already richly valued, trading at around 65 times expected 2020 earnings and 52 times expected 2021 EPS. The stock’s 52-week range is $82.07 to $254.39. PayPal does not pay a dividend.
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Qualcomm
Chipmaker Qualcomm Inc. (NASDAQ: QCOM) also reports late Wednesday, after posting a share price gain of 77% last year and adding 6.6% so far in 2021. Like one of its largest customers, Qualcomm has gotten a big boost from smartphone users upgrading to 5G-compatible phones.
Even though that customer (Apple) is working on its own modem chip to replace Qualcomm’s, analysts at Canaccord Genuity expect the chipmaker to be as much as six generations ahead of Apple by the time the iPhone maker has its first 5G modem chip out the door. Analysts at Robert Baird initiated coverage of Qualcomm in early January with an Outperform rating and a $200 price target, the highest yet for the chipmaker.
Analysts expect Qualcomm to report first fiscal quarter 2021 EPS of $2.10, more than double EPS in the same period last year, and sales of $8.26 billion, a jump of more than 63%. For the 2021 fiscal year, analysts estimate EPS to total $7.18 (up 71%) on sales of $30.4 billion (up more than 40%).
With shares trading at around $163, the stock is trading at about 23 times expected 2021 EPS and 20 times expected 2022 EPS. Based on the consensus price target of $169.08, Qualcomm stock has a potential upside of around 3.5%, but based on the high price target the potential upside is more than 18%. Qualcomm pays a dividend yield of 1.61%.
Nokia
Last year, Nokia Corp. (NYSE: NOK) shares added more than 5%, but the story with this stock is the gain it has produced so far in 2021. By last Thursday, the stock had posted a gain of more than 67% for January. That has fallen back to around 15% as of late Tuesday morning.
Nokia was one of those stocks picked by Robinhood investors to teach short sellers a lesson, but the lesson came undone as quickly as it started. Robinhood’s Friday trading halt all but killed the effort to inflict a short squeeze. It would have been difficult in any event, since just 1.2% of Nokia’s total float is shorted.
Nokia reports results Thursday morning before markets open. Analysts are expecting it to post quarterly EPS of $0.13, down 24% year over year, on revenue of $7.4 billion, down 2.8%. For the full year, analysts are looking for EPS of $0.26, a penny better than a year ago, on sales of $25.2 billion, a decline of about 3.4%.
At Tuesday’s trading price of around $4.50, the stock trades at a multiple of 17 to expected 2020 EPS and a multiple of nearly 19 to forecast 2021 earnings. The stock’s price target is $4.53, and Nokia does not pay a dividend. So far Tuesday morning, nearly 112 million Nokia shares had changed hands.
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Vista Outdoor
Also expected to report results early Thursday is Vista Outdoor Inc. (NYSE: VSTO). The company is interesting because outdoor gear and equipment have been big sellers since the pandemic has forced so many people to stay cooped up for so long. Getting outside is both safe and relaxing, and this could be a big winner for Vista in the final two quarters of its 2021 fiscal year.
The company’s shooting sports division (by far its largest) accounted for 68% of revenues in the 2020 fiscal year that ended in June. In the first two quarters of the 2021 fiscal year, Vista’s ammo sales are more than 28% higher than in the first half of the prior year and more than three times outdoor gear sales.
The company forecast lower sales and profits for its third quarter. Analysts are looking for EPS of $0.65, more than triple the amount in the year-ago quarter, and sales of $520.1 million, up nearly 30% year over year. For the fiscal year ending in March, analysts are forecasting EPS of $2.75, up more than 10 times from the prior-year quarter on sales of $2.08 billion, up by 18.6%.
At a recent price of around $30.65, the stock has a potential gain of around 10.2% to the consensus price target of $33.78. At a high price target of $39, the implied gain is more than 17%. Vista Outdoor does not pay a dividend.
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