Investing

Earnings Previews: Alberstons, Otis Worldwide 

The end of the week brings a slowdown in March-quarter earnings releases. More companies continue to beat estimated earnings and revenues than the other way round, but expectations have not been particularly high. A couple of notable misses Thursday morning were American Airlines and Valero Energy.

After markets close Thursday, we’ll hear from Intel, Snap, American Express and Honeywell. No notable releases are expected Friday, and only two notable releases are on tap for Monday morning.

Albertsons

Grocery store operator Albertsons Companies Inc. (NYSE: ACI) came public in June of last year and, after a rough start, the shares increased by about 25% since then. Earlier this month, the company announced a multiyear partnership with Google to use technology to develop a range of services for the 2,253 stores’ customers.

Of 19 brokerages covering the stock, 12 have assigned Buy or Strong Buy Ratings and five more rate the shares at Hold. The consensus price target on the stock is $21.06, implying potential upside of around 9.4% to a recent price of about $19.25. At the high target of $31, upside potential reaches 61%.

Consensus estimates call for earnings per share (EPS) of $0.51 on sales of $15.67 billion. While sequential revenue is expected to rise by just 1.8%, EPS is forecast to fall by nearly 22%. For the full year, EPS is forecast at $2.96 on sales of $69.48 billion. Those estimates reflect a year-over-year decline of 6% in sales and more than 35% in EPS.

Albertsons’ stock trades at 6.1 times expected 2021 EPS, 10.0 times estimated 2022 earnings and 9.7 times estimated 2023 earnings. The stock’s 52-week range is $12.91 to $20.89. Albertson’s pays an annualized dividend of $0.40 (yield of 1.97%).

Otis Worldwide

Elevator and escalator maker Otis Worldwide Corp. (NYSE: OTIS) spun out of United Technologies in March of last year at the same time that UTC merged with Raytheon. Since then, the shares have added nearly 58%, compared to a stock price gain of 66% for Raytheon since the spin-off. Carrier Global, a maker of building HVAC, refrigeration and other technologies, was the big winner though, gaining 261% since its spin-off at the same time as Otis’s.

Sentiment on Otis stock is positive, with eight of 12 brokerages rating the shares a Buy or Strong Buy. Three have Hold ratings on the stock, and there is one Underperform rating. The consensus price target is $75.22, and at a current price of around $71.50, the potential upside is 5.2%. At the high target of $85, upside potential is near 19%.

Analysts expect the company to report EPS of $0.63 on sales of $3.18 billion. The full-year forecast calls for EPS of $2.74 on revenue of $13.54. Sequentially, revenue is expected to be nearly 10% lower and EPS is forecast to drop by about 4.5%. Full-year revenue is estimated to be about 6% better, while an 8.7% gain in EPS is anticipated.

Shares currently trade at 26.1 times expected 2021 EPS, 24.3 times estimated 2022 earnings and 23.1 times estimated 2023 earnings. The stock’s 52-week range on the stock is $46.31 to $71.69. Otis pays an annualized dividend of $0.96 (yield of 1.36%).