Investing

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

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.