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Earnings Preview: Applied Materials, Roku, Dropbox, Livent and Deere

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Here’s a preview of four U.S. firms that will be reporting results after markets close Thursday and one that reports before markets open Friday morning. Of these five firms, two represent the tech sector, one is a communications services firm, one is a lithium miner and the other is an industrial firm.

Applied Materials

Applied Materials Inc. (NASDAQ: AMAT) reports after the closing bell on Thursday. The company makes and sells a variety of manufacturing systems used to make semiconductor chips. More than half the company’s sales are to chip fabs, with the remaining 44% divided equally between memory chip and flash memory makers. Shares added 43% in 2020 and have gained another 32% since the beginning of the year.
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Analysts expect first fiscal quarter 2021 earnings per share (EPS) of $1.28, a year-over-year jump of 31% on revenue of $4.97 billion, up nearly 20% compared to the same period of last year. The current estimates for the full 2021 fiscal year call for EPS of $5.12 and revenue of $19.9 billion.

The stock currently trades at around $114 a share, yielding a multiple of 22 times expected 2021 EPS and about 21 times expected earnings in 2022. Applied Materials pays an annual dividend of $0.88 (yield of 0.74%).

Roku

Roku Inc. (NASDAQ: ROKU) makes and sells devices and software that enable streaming video, along with selling advertising on its own platform. It was Roku’s move into attracting more ad dollars that led BofA analyst Ruplu Bhattacharya late last month to maintain his Buy rating and to increase his price objective on Roku stock from $380 to $500, the highest from 23 brokers.

The company has made a couple of recent acquisitions, both aimed at boosting its ad revenue, one by adding Quibi content and the other by buying ad-tech platform DataXu.

For the fourth quarter of the company’s 2020 fiscal year, analysts expect Roku to post a net loss per share of $0.06 on sales of $615 million, a 50% increase in sales, and nearly a 50% decline in the quarterly net loss. Analysts expect the company to report a full-year net loss of $0.74, nearly 50% larger than the loss in 2019 on revenue of $1.74 billion, up 54% year over year.

While the company is expected to post net losses both in 2020 and 2021, the stock trades at around 841 times expected 2022 earnings of around $0.53.

Dropbox

Cloud-based data storage company Dropbox Inc. (NASDAQ: DBX) offers a collaboration platform for its customers. The company laid off 315 staffers (about 11% of its total workforce) in mid-January and, at the same time, announced that Chief Operating Officer Olivia Nottebohm would leave the company in early February.


In 2020, Dropbox’s stock added nearly 24%, and it has tacked on another 7% since January 2. That’s good, not great, and the company is not drawing much attention from analysts, with just nine offering up a consensus price target of $28.39, about $5 a share higher than a recent trading price of around $23.60, implying an upside of around 21%.

Analysts are expecting Thursday afternoon’s report to show that Dropbox had $0.24 in quarterly EPS, up 50% year over year, on revenue of $498.6 million, a year-over-year increase of around 12%. Full-year EPS is expected to total $0.89, a year-over-year gain of nearly 98%, and revenue is tabbed at $1.9 billion, up 15%.
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At current prices, Dropbox stock trades at a multiple of around 27 times expected 2020 earnings and 23 times expected 2021 earnings.

Livent

This subsidiary of FMC manufactures and sells lithium-based batteries at the same time that it extracts and purifies lithium ore at its mine in Argentina for other customers. About 65% of Livent Corp.’s (NYSE: LTHM) 2019 revenue came from Asian customers, with Japan accounting for 41%, China for 14% and other Asian buyers for the remainder. North American customers drove 20% of 2019 revenue. Livent also is taking a 25% stake in the New Nemaska lithium project in Quebec.

Since the beginning of 2021, the company has been downgraded by three of four analysts firms, but three of the four also raised their price targets on the stock. Raymond James downgraded shares from Strong Buy to Outperform and raised its price target to $24, the highest among 10 brokers covering the company.

Livent is expected to report quarterly EPS of $0.01, a drop of 80% compared with the same period in 2019. Revenue rose nearly 6% for the quarter but was down almost 26% for the year. The company’s net loss for the year is expected to be $0.01 per share, a far cry from 2019 EPS of $0.42 per share. At the current share price of around $21.50, the stock trades at a multiple of around 79 times expected 2021 EPS and 43 times expected 2022 earnings.

Deere

On Friday, Deere & Co. (NYSE: DE) is expected to report results before markets open. The farm and heavy equipment maker saw its share price rise by around 58% in 2020, even after dropping by 35% in mid-March, when the COVID-19 pandemic was doing serious damage to equity values.

Chief Economist Aneta Markowska of Jefferies released an outlook for 2021 forecasting GDP growth of 6.4%, and the firm’s analysts have identified 34 companies they expect to benefit the most from that level of economic growth. Deere is one of them. The stock trades at around $314 per share currently, a gain of nearly 17% for the first six weeks of 2021.

Deere is expected to post fiscal first-quarter EPS of $2.14 on sales of $7.2 billion, a year-over-year improvement of 31% in earnings and nearly 11% in revenue. For the full year 2021 ending in October, the company is expected to report EPS of $13.15, up 51% compared to the 2019 fiscal year, and revenue is forecast to increase more than 14% to $$35.7 billion.

At the current share price, Deere stock trades at about 24 times expected 2021 EPS and 20 times expected 2022 earnings. The company also pays an annual dividend of $3.04 (yield of 0.96%).

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