Investing

Earnings Previews: Electronic Arts, Sundial Growers, QuantumScape and More

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More than 550 U.S.-listed companies are reporting quarterly results on the first three days of this week. That’s less than half as many as reported earnings last week, and the totals will dwindle further as the month progresses.

Looking at companies reporting earnings following Monday’s close and Tuesday’s opening bell, we find Palantir, Roblox, 3D Systems, Tilray and Velodyne.

This preview covers five firms reporting earnings after markets close Tuesday.

Electronic Arts

Electronic Arts Inc. (NASDAQ: EA) is due to report fiscal fourth-quarter and full-year 2021 results. In calendar year 2020, EA added just over 33% to its share price, well below competitor Activision Blizzard’s gain of 57%. Partly that’s due to relatively strong demand and short supply for the new PlayStation 5 and Xbox Series X. For the year to date, the share price is down less than 1%.

Analysts remain bullish on the stock with 22 of 27 rating the shares a Buy or Strong Buy. At a recent share price of around $142.50, upside potential to a consensus price target off $160.95 is about 13%. At the high target of $177, the potential upside to the current price is 24.2%.

Analysts expect earnings per share (EPS) of $1.05 on sales of $1.39 billion. EPS is three cents below the total for the same quarter a year ago, but revenue is up by 14.5%. For the full 2021 fiscal year, the consensus estimates call for EPS of $5.58 (up 16.0%) on sales of $6.08 billion (up 16.8%).

At the current price, the stock trades at 25.4 times expected 2021 EPS, 23 times estimated 2022 earnings and 20.8 times estimated 2023 earnings. The stock’s 52-week trading range is $110.15 to $150.30. EA pays an annual dividend of $0.68 (yield of $0.48%). The average daily trading volume is about 2.3 million shares.

FuboTV

Streaming network FuboTV Inc. (NYSE: FUBO) had a blistering 2020, at least momentarily. The stock soared to a gain of around 600% in late December before giving back most of that to close 2020 with a gain of more than 200%. Still not bad for a stock that bounces around at more than double the volatility rate of the entire market. The sports, news and entertainment network’s high-flying ways didn’t carry over to 2021, however. The stock trades down about 40% so far this year.

Of eight analysts covering the stock, seven have rated the shares a Buy or Strong Buy. At a price of about $16.75 a share, the potential upside is 171%. At the high target of $60, the upside potential is 258%. The high target is still more than two dollars lower than the 52-week high set in December.

For FuboTV’s fiscal first quarter, analysts are expecting a loss per share of $0.46 on sales of $103.79 million. For the entire fiscal year, estimates call for a per-share loss of $1.82 on sales of $472.27 million. The company posted a loss per share of $7.40 in the prior year on sales of $217.75 million.

The company is not expected to post positive earnings in 2021, 2022 or 2023. The 52-week range is $8.12 to $62.29. The company does not pay a dividend, and the average daily trading volume is about 14.5 million shares.

Kinross Gold

Gold miner Kinross Gold Corp. (NYSE: KGC) rang up a 56% share price gain last year. So far in 2021, the stock price has been volatile, trading down more than 15% in early March but now showing a gain of around 7.5%. The company’s annual shareholders’ meeting is coming up on Wednesday, and CEO compensation is on the agenda. CEO J. Paul Rollinson is paid well above the median for comparable mining companies, but the company also has performed better. Rollinson’s total compensation breaks down to around 15% in salary and 85% in stock and other, almost 180 degrees different from the industry norm.
The NYMEX gold contract recently bounced off 12-month lows, but still trades about $200 per ounce below a peak of more than $2,000 set last August. That has kept analysts cool to gold stocks, including Kinross. Eleven of 19 firms rate the stock a Hold, even though the $7.85 price is about 44% below the consensus price target of $11.32. At the high target of $15, upside potential on the stock is near 50%.

For the March quarter, analysts expect EPS of $0.15, 50% better than in the same period of last year. Revenue is expected to rise by nearly 22% to $1.07 billion. For the full fiscal year, analysts are looking for EPS of $0.63 on sales of $4.52 billion.

Kinross stock trades at 12.5 times expected 2021 EPS, 8.6 times estimated 2022 earnings and 8.5 times estimated 2023 earnings. The stock’s 52-week range is $5.88 to $10.32. Kinross pays an annual dividend of $0.12 (yield of 1.55%), and the average daily trading volume is 14.1 million shares.

QuantumScape

Solid-state lithium-metal battery maker QuantumScape Corp. (NYSE: QS) came public in late November in a reverse merger with a blank-check company. Shares closed that first trading day at $37.00, and before a month had passed, the stock traded at roughly four times that. The downward trend has not been as swift in the past two and a half months, but it is steadily downward. Partly that’s due to a damning short seller report that compared QuantumScape to Theranos. On the plus side, Volkswagen, both a customer and an investor, has stuck by the company.

The four firms offering coverage of QuantumScape are evenly split between Hold and Buy ratings. The $29.40 price implies an upside potential of about 96% to a consensus price target of $57.50. At the high target of $70, upside potential is 138%.

Analysts are expecting a loss per share of $0.07 with no revenue. For the full year, analysts are expecting a loss per share of $0.28 with no revenue. The good news is that QuantumScape’s net proceeds from the November IPO totaled $680 million. The less-good news is that the company last Friday restated 2020 liabilities related to a change in accounting for warrants required by the Securities and Exchange Commission. The impact was not trivial:

The change in the accounting treatment for the Assumed Common Stock Warrants and the resulting restatement and revision of our consolidated financial statements resulted in an increase in total liabilities of approximately $690 million and a decrease of approximately $108 million in additional paid-in capital in our Consolidated Balance Sheet as of December 31, 2020, and an increase in expenses of approximately $582 million in our Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2020.

The company said the restatement had no effect on liquidity or cash, but the stock traded down about 6% in the early afternoon Monday, at $29.20 in a 52-week range of $9.74 to $132.73. The average daily trading volume is 14.7 million shares.

Sundial Growers

Shares of Canada-based cannabis producer Sundial Growers Inc. (NASDAQ: SNDL) languished below $1.00 for much of 2020, only to soar by more than 500% in early February as a result of an explosion of buying by retail investors. Even though the stock has given back most of the gain, it is still up by about 57% for the year.

Of three analysts covering the stock, two rate the shares at Sell or Underperform. The consensus price target is $0.91, indicating upside potential of 23% from a recent price of $0.74. At the high target of $1.51, the upside potential is more than 100%. High is the right word for that.

The company is expected to post a per-share loss of $0.01 in the first quarter on sales of $10.99 million, a drop of about 60% in year-over-year revenue, while a significant improvement from last year’s quarterly loss of $0.41 per share. Estimates for the full year are not available.

Sundial’s 52-week trading range is $0.14 to $3.96. The average daily trading volume totals a whopping 365.3 million shares.

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