Investing

Earnings Previews: iRobot, MGM Resorts, Uber and Zynga

Wednesday morning’s earnings reports mark the halfway point in this busiest week of earnings season. Next week’s report count will be lower due to the President’s Day holiday.

This edition of our earnings previews focuses on four companies set to report December quarter results before Wednesday’s opening bell.

iRobot

iRobot Corp. (NASDAQ: IRBT) is the maker of Roomba robot floor vacuum cleaners, Braava floor mopping robots and Terra robotic lawn mowers, among other things. Like many other consumer discretionary stocks, iRobot had a good 2020, with a share price increase of nearly 60%.

Then things got really crazy as shares doubled when retail investors drove prices higher, squeezing short sellers who held more than 38% of the company’s shares. The share price doubled by January 27 and has since fallen back to a gain of around 53% for the first six weeks or so of 2021.

Analysts expect the company to report fourth-quarter earnings per share of $0.31, less than half EPS in the year-ago quarter, and revenue of $494 million, up 16% year over year. For the full year, analysts are looking for EPS of $3.63, up 22%, on revenue of $1.4 billion, up nearly 14%.

At a current price of around $123, iRobot stock has outrun its consensus price target of $101.50 and its high target of $120. The 52-week high of $197.40 suggests a potential upside of 60%. Shares trade at around 34 times expected 2020 EPS and 56 times expected 2022 earnings.

MGM Resorts

MGM Resorts International (NYSE: MGM) on Monday received an upgrade from BofA Securities from Underperform to Neutral that boosted the share price by around 15% in just one day. That’s more good news for the hotel and casino operator that saw its share price plunge by nearly 80% in late March of last year, the deepest trench of the COVID-19 pandemic.

A late March Federal Reserve decision to purchase commercial mortgage-backed securities lifted MGM stock (and others), and by the end of December, MGM shares were down less than 5% for the year.

Consensus estimates for the fourth quarter call for a net loss of $0.92 per share on revenue of $1.5 billion, down more than 50% from revenue in the fourth quarter of 2019. For the full year, MGM’s net loss is tabbed at $3.82 per share on sales of $5.2 billion, a revenue drop of some 60% year over year. The stock is also forecast to post a net loss of $1.71 per share in 2021 before recovering to post EPS of $0.22 in 2022. At the current share price of around $35.75, MGM stock trades at nearly 327 times expected 2022 earnings.

Uber

Since the beginning of the year, analysts have shown some love for Uber Technologies Inc. (NYSE: UBER). Of nine ratings since January 4, all have maintained the equivalent of a Buy rating on the stock and all have boosted their price targets.

The ride-sharing firm succeeded in recovering from a sharp drop at the peak of the pandemic lockdowns by swerving into the delivery business. In the third quarter of last year, ride-sharing revenue declined 53% while delivery revenue jumped by 125%, holding the corporate shortfall in revenue to 18%.

Analysts expect Uber to report a fourth-quarter net loss per share of $0.55 on revenue of $3.6 billion. The year over year loss is smaller, but revenue is also forecast to be down. For the full year, the consensus estimate calls for a loss per share of $3.87 on sales of $12.3 billion. The net loss reflects a sharp decrease for the year-ago loss of $6.81. With losses forecast for both 2020 and 2021, the stock trades at about 88 times expected EPS of $0.37 in 2022.

Zynga

Video game maker Zynga Inc. (NASDAQ: ZNGA) posted a share price gain of more than 60% in 2020, largely due to people around the world being subjected to lockdowns and turning to their computers and mobile devices for entertainment.

Zynga depends on ad tracking for both revenue and recruiting new users, so the coming privacy feature for Apple’s iPhone and iPad operating systems could have a negative effect on Zynga’s revenues going forward. The company also spent nearly $2 billion on acquisitions last year, leaving analysts upbeat about the outlook for this year.

The consensus estimate calls for EPS of $0.09 in the fourth quarter and $0.37 for the full year, up more than 40% over 2019. Quarterly revenue is set to rise by 56% to $677.7 million and full-year revenue is tabbed to rise nearly 44% to $2.25 billion.

At a current price of around $11.50 per share, the stock trades at a multiple of about 31 times expected 2020 EPS and 27 times expected 2021 EPS. The stock posted a new 52-week high of $11.49 earlier Tuesday morning. The 52-week low is $5.65 and the consensus price target is $11.91.