Investing

Earnings Previews: OrganiGram, Fastenal

The next edition of earnings season begins in earnest next Wednesday morning, with three of the nation’s biggest banks releasing fiscal first-quarter results before the opening bell is rung.

In the meantime, we have two earnings reports due before markets open Monday, one for a marijuana grower and the other a distributor of industrial supplies.

Fastenal

Fastenal  Co. (NASDAQ: FAST) is a wholesale distributor of industrial and construction supplies like bolts, nuts and washers to a wide range of markets. The stock added nearly 37% to its share price last year and posted its 52-week high in mid-January. So far in 2021, the stock has added just over 2%.

Analysts have a consensus price target of $50.63 on the stock with half (nine) rating the shares a Hold and the other nine rate the stock as a Buy or Strong Buy. At its current trading price of around $49.50, the potential upside on the stock is about 2.3%.

The consensus estimate for 2021 first-quarter earnings per share (EPS) is $0.37, an increase of two cents compared with the prior-year quarter. Revenue is forecast to reach $1.43 billion, a year-over-year increase of 4.8%. Current estimates for full-year EPS and revenue are $1.56 (up 4.7%) and $5.9 billion (up 4.4%), respectively. Fastenal raised its quarterly dividend by 12% to $0.28 per share ($1.12 annualized) in January.

The shares traded down about 1.4% in the noon hour Friday, at $49.53 in a 52-week range of $31.87 to $51.89. At the current trading price, the stock trades at 32.0 times expected 2021 EPS, 29.0 times expected 2022 earnings and 26.5 times expected 2023 earnings.

OrganiGram

OrganiGram Holdings Inc. (NASDAQ: OGI) is a Canadian company that grows marijuana and manufactures and sells a range of cannabis and cannabis-derived products in Canada. The company’s stock dropped nearly 46% last year and added about 35% in 2021 through early February, before dropping about half that gain and settling Thursday with a year-to-date gain of 140%. That’s good enough for a 12-month share-price gain of nearly 75%.

At a recent trading price of around C$4.00, the stock has outrun its average price target of C$2.76, likely due to its identification as a meme stock along with GameStop and AMC Entertainment. That’s not an entirely accurate take, however, because OrganiGram’s shares trade at a multiple of about 13 times expected sales for 2021, not an unrealistically high multiple given Canopy Growth’s multiple of nearly 39.

Analysts are expecting the company to post a net loss per share for the February quarter of C$0.03 in the quarter, equal to its year-ago loss. Revenue is forecast at C$19.8 million, down from C$25 million in the year-ago quarter.

Shares traded down about 0.5% Friday to C$3.95, in a 52-week range of C$1.35 to C$8.00. OrganiGram is not expected to post a profit for either the 2021 or 2022 fiscal years.