Investing

Earnings Previews: JinkoSolar, Aphria, Northern Dynasty

There are a few remaining earnings reports to come out for the quarter ending in December or January, but investors and analysts are gearing up for next week. That’s when the first important earnings reports for the March quarter will be released. Of particular interest, of course, will be the reports from the nation’s big banks.

We have one earnings report due before markets open Friday and two more before Monday’s opening bell.

JinkoSolar

China-based solar photovoltaic maker JinkoSolar Holding Co. Ltd. (NYSE: JKS) is set to report earnings before markets open on Friday. After posting an all-time high share price of $90.20 in October of last year, shares have declined by nearly 30%. At its peak in 2020, JinkoSolar stock was up about 290%, and it closed the year up 175%, before dropping more than 35% in 2021. That’s still a share-price gain of 159% over the past 12 months.

The company trades American depositary shares (ADSs) in the United States, with each ADS equal to four ordinary shares, and completed an at-the-market offering of $100 million in ADSs in early January.

Analysts have a median price target on the stock of $57, about 42.5% above its trading price on Thursday morning. At the high target of $75 a share, the potential upside on JinkoSolar is a whopping 87.5%.

The consensus earnings per share (EPS) estimate for the fourth quarter is $0.37, a decline of 74% year over year, on forecast sales of $1.38 billion, up less than 1%. For the 2020 fiscal year, analysts expect the company to report EPS of $3.14, $0.15 a share lower than a year ago on sales of $5.11 billion, up nearly 20% year over year. While revenue is rising, profits are slipping and that is largely the result of ever-declining prices for solar panels. Selling more products at lower margins only works until it doesn’t.

The ADSs trade at a multiple of around 12 times expected 2020 earnings per share, nine times expected 2021 earnings and eight times expected EPS in 2022.

Aphria

Canada-bases pot grower Aphria Inc. (NASDAQ: APHA) is scheduled to report third-quarter results before markets open on Monday. After the company’s proposed reverse merger with another Canadian pot grower, Tilray, the surviving firm will be called Tilray, but current Aphria shareholders will own 62% of the shares. The deadline for shareholders to vote is Monday afternoon at 4 p.m. ET.

At its peak in 2020, Aphria shares traded up more than 62%, before closing the year with a gain of 33%, sharply better than the loss of 8% posted in 2019. Over the past 12 months, the story has improved as some large states (New Jersey and, recently, New York) have legalized marijuana and the shares have added 440%.

Analysts have a consensus price target on the stock of $14.64, about 12.5% below its trading price on Thursday morning. At the high target of $32.50 a share, the potential upside on Aphria is about 60%.

Consensus estimates call for a loss per share of C$0.03 on sales of C$168.7 million. Estimates for the 2021 fiscal year call for a net loss of C$0.23 per share on sales totaling C$674.6 million.

At a current trading price in New York of around $16.50, the shares traded at a multiple of 227 times expected 2022 EPS of $0.07 and 46 times expected 2023 earnings.

Northern Dynasty

Junior gold mining company Northern Dynasty Minerals Ltd. (NYSEAMERICAN: NAK) had an awful year in 2020, dropping nearly 25% for the year but by 87% from its high of $2.49. The U.S. Army Corps of Engineers last November denied the company a permit for its massive open-pit copper and gold Pebble Mine, and just on Wednesday, a group of 50 investors sent the U.S. Environmental Protection Agency (EPA) a letter urging the agency permanently to protect the Bristol Bay region from large-scale mining.

The company on Tuesday appealed to new EPA Administrator Michael Regan, seeking an EPA review of the Corps rejection of the Pebble project. In late February, the Corps accepted the company’s appeal request. According to the Corps’ established guidelines, the appeal should conclude within 90 days.

Of three brokerages covering the company, two (BMO Capital Markets and H.C. Wainwright) have the equivalent of a Buy rating on the shares. BMO’s price target was raised last July from $1.50 to $3.50, while Wainwright raised its target from $0.80 to $1.20 in February. TD Securities has a Hold rating on the stock with a price target of $1.15.

There are no consensus estimates for Northern Dynasty’s earnings or losses or revenues, but an average of more than 41 million shares a day are traded.

The stock currently trades at around $0.62 per share in a 52-week range of $0.31 to $2.49.