Earnings Previews: Discovery, Domino's Pizza, Royal Caribbean

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Friday afternoon is typically not a time that companies want to release their quarterly earnings results. This week is no exception.

There are several earnings on tap next week, with just three of note on the schedule for Monday morning before markets open.



Discovery Inc. (NASDAQ: DISCA) operates a number of television networks, both in the United States and internationally, including the Discovery Channel, Animal Planet and Food Network. The company’s share price dropped by about 8% in 2020.

The company launched a new subscription streaming service, Discovery+, in January and that has boosted the stock by nearly 66% in the first six weeks of this year, giving the shares a 12-month gain of around 65%. Alas, none of the streaming services revenue will make it into the earnings report due on Monday. But CEO David Zaslav is sure to say something about it and probably something positive.

Analysts expect to see quarterly earnings per share (EPS) of $0.72 and revenue of $2.83. In the same period last year, Discovery posted EPS of $0.98 on sales of $2.87 billion. For the full year, the consensus EPS estimate is $3.15 on revenue of $10.62 billion. That’s a decline of 14.6% in EPS and 4.7% in revenue.

The stock posted a new 52-week high of $50.68 Thursday morning, well above the consensus price target of $34.20. At the current price of around $50, the stock trades about 16 times expected 2020 and 2021 EPS.

Domino’s Pizza

In 2020, Domino’s Pizza Inc. (NYSE: DPZ) posted a share price gain of around 32%. Based on retail sales, Domino’s is the world’s top pizza company, and it has more than 17,000 locations worldwide. Revenue has been up thanks to lockdowns to slow the spread of COVID-19, and net income is up by 25% year over year for the first nine months of the year. The company sees even more potential for opening more stores in its top markets. Guidance for the new fiscal year will drive investors’ reaction to Domino’s earnings report.

EPS for the fourth quarter has been estimated at $3.88, up 24% year over year, and full-year EPS is expected to be $12.43, up 30% compared to 2019. Revenue for the quarter is projected to grow by around 20% to $1.38 billion and full-year revenue is expected to rise by nearly 15% to $4.15 billion.

The stock traded at around $377.70 on Thursday, in a 52-week range of $275.22 to $435.58. The price target on the stock is $430.19, implying a potential upside to the recent price of nearly 14%. The stock trades at about 30 times expected 2020 EPS and 29 times expected 2021 EPS.

Royal Caribbean

This is among the stocks hit hardest by the coronavirus pandemic. The Royal Caribbean Group (NYSE: RCL) share price fell by around 44% last year, but that’s something of a victory considering shares traded down by 83% at the trough in mid-March.

Long-term debt has roughly doubled in the 12 months through September of last year to $17.6 billion as the company tries to stay afloat. Most rating action has been to the downside, but the company’s stock currently trades above its consensus price target.

The uptick in the stock price is likely the result of the increased vaccination rates in the United States and a few other wealthy countries. Competitor Norwegian Cruise Lines just extended its suspension of sailings to May 31, a month longer than both Royal Caribbean and Carnival.

Analysts expect the company to post a quarterly loss per share of $5.20, compared to a profit per share of $1.42 in the same quarter last year. Revenue has dropped from $2.5 billion to just $35.6 million over the same period. For the year, the loss per share is forecast at $18.58, down from a profit of $9.54 per share in 2019. Revenue is forecast to be down by about 80% to $2.2 billion.

The per-share loss is expected to moderate by about a third in 2021 but the company is not expected to post an annual profit again until 2022.

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