Investing

Earnings Previews: Activision Blizzard, Ford, Peloton and T-Mobile

Paul Ausick

Published: February 3, 2021 12:41 pm

Another busy day of earnings is on tap for Thursday. We covered two major health care companies in our weekly preview from Sunday: Merck and Bristol-Myers Squibb. On Tuesday, we previewed announcements scheduled to arrive before markets open Thursday morning from eBay, PayPal, Qualcomm, Nokia and Vista Outdoors.

Here’s a preview of four companies that will be reporting quarterly results after markets close Thursday.

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Activision Blizzard

Activision Blizzard Inc. (NASDAQ: ATVI) shares posted a gain of more than 57% last year but have added less than 1% so far in 2021. The video game business had a big year in 2020, and 2021 promises to be another good one, at least for Activision. The company will be releasing its “Call of Duty: Mobile” game in the United States this year. The game was launched in late December in China and raked in $14 million in player spending in its first week. The game could add $500 million to the company’s top line this year.

The consensus estimate for quarterly earnings per share (EPS) is $1.18, about 4% lower than the year-ago quarter, on revenue of $2.83 billion, an increase of 4.6% year over year. For the 2020 fiscal year, analysts are forecasting EPS of $3.44, a jump of nearly 53% compared to 2019, and revenue of $8.18 billion, up 28% year over year.

At a current price near $93.50, shares trade at 27.3 times expected 2020 EPS and 26.8 times expected 2021 earnings. The consensus 12-month price target on the stock is $100.79, implying a potential upside of about 7.8%. At the high target of $117, the potential share-price gain is more than 25%. Activision pays a dividend yield of 0.44%.

Ford

Ford Motor Co. (NYSE: F) did not share in the share-price run-ups that tech stocks had last year. The stock dipped about 4% in 2020 but has jumped more than 27% since the beginning of this year. Sales for the year just ended fell by 16% compared to 2019, but the good news was that the average selling price was stronger due to slowdowns in production due to the COVID-19 pandemic.

Total sales dipped more than 8% in January, while retail sales rose 5.5%. Production (and sales) of the all-electric Mustang Mach-E SUV is expected to boost 2021, sales and the company continues to work on an electrified F-150 pickup, so there is some good news ahead.

Analysts are expecting a fourth-quarter net loss of $0.07 a share on sales of $33.9 billion. Ford posted EPS of $0.12 in the same period a year ago on sales of $36.7 billion. For the full year, Ford is expected to post a net loss of $0.01, far below its $1.19 EPS in 2019. Revenue is forecast to be down more than 18% at $117.47 billion.

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At a current price of around $11.30, shares are up more than 4% for the day and well above the 12-month price target of $9.85. The stock trades at about 10.5 times expected 2021 earnings and 7.9 times expected earnings in 2022. The 52-week range is $3.96 to $12.15. Ford has suspended its dividend.

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Peloton

Peloton Interactive Inc. (NASDAQ: PTON) was another company to see its share price soar as consumers were staying home during the pandemic. The stock added more than 430% last year and has given back about 2.5% since the beginning of the year.

According to FactSet data, 24 of 28 analysts covering the company have assigned it a Buy rating. It is likely that analysts will want to see solid evidence of growth in Peloton’s monthly fitness subscribers and an outlook for more in the year just started.

For its second fiscal quarter, Peloton is expected to report EPS of $0.09 and sales of $1.03 billion. For the fiscal year ending in June, EPS is estimated at $0.38 on sales of $3.95 billion. At a recent price of around $148.60, shares have an implied gain of around 4.6%. The high target of $190 implies a potential upside of nearly 28%. The stock is trading massive multiples to its expected earnings in both 2021 and 2022. Peloton does not pay a dividend.

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T-Mobile

Last year, T-Mobile US Inc. (NASDAQ: TMUS) added nearly 72% to its share price, and it has given back nearly 4% so far in 2021. The company has been pushing its 5G network hard and the release of Apple’s 5G-compatible iPhone 12 certainly has had a positive impact on the company’s sales. T-Mobile far outperformed rivals AT&T (shares dropped 21% last year) and Verizon (shares added about 7.5% in 2019) and its 5G push still has a lot of room to run.

Analysts are looking for EPS of $0.51 for the fourth-quarter and $2.70 for the 2020 fiscal year. Revenue is forecast at $19.9 billion for the quarter and $67.7 billion for the year. Revenue was up 68% and 50%, respectively, for the quarter and the year, but EPS was down.

At a recent price of around $129.50, the stock has a potential upside of around 17.7% to its consensus price target of $152.39. At the high target of $215, the potential upside is a whopping 66%. Those potential gains come out to multiples of 43 and 39 to expected EPS in 2020 and 2021, respectively.