Earnings Previews: Applied Materials, Deere, Palo Alto Networks, Ross Stores

Ross Stores

Apparel retailer Ross Stores Inc. (NASDAQ: ROST) eked out a 5.5% share price increase last year after dropping by nearly 50% by late March. So far in 2021, shares are up about 2.3%. A recent review by Deutsche Bank analyst Paul Trussell thinks sales could recover as California begins to lift its restrictions on mask-wearing and social distancing. More than 27% (431 of 1,539) of the company’s stores are located in California.

Sentiment is quite bullish on the stock, with 17 of 25 analysts rating the shares a Buy or Strong Buy. The upside potential on the stock at $125.40 a share and with a consensus price target of $133.89 is 6.8%. At the high target of $145, the upside potential is nearly 16%.

Ross is expected to report first-quarter EPS of $0.88 on sales of $3.87 billion. The full-year estimates call for EPS of $4.20 and revenue of $17 billion.

Shares are trading at a multiple of 104.8 times expected 2021 EPS, 29.8 times estimated 2022 earnings and 24.7 times estimated 2023 earnings. The stock’s 52-week range is $79.65 to $134.22, and Ross pays an annual dividend of $1.14 (yield of 0.91%). The average daily trading volume is about 2.1 million shares.

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Deere

Farming and heavy equipment maker Deere & Co. (NYSE: DE) is set to report fiscal second-quarter results before markets open Friday. Its shares gained about 58% last year and have added another 33% so far in 2021, although the recent trend has been downward. Much of Deere’s potential for the rest of this year is down to farm prices. These have been rising steadily for 11 of the past 12 months, only slowing down in the past 30 days. What Deere has to say about its outlook will probably mean more than its absolute results.

Analysts have taken a wait-and-see approach to the stock, with 14 of 22 tagging Deere with a Hold rating. At a price of around $357, the upside potential based on a consensus price target of $398.47 is about 11.6%. At the high target of $455, upside potential is nearly 28%.

Consensus estimates call for EPS of $4.52 on sales of $10.44 billion for the quarter. For the full year, analysts are looking for EPS of $16.01 on sales of $37.82 billion.

Shares are trading at a multiple of 22.1 times expected 2021 EPS, 19.1 times estimated 2022 earnings and 16.9 times estimated 2023 earnings. The stock’s 52-week range is $138.11 to $400.34. Deere pays an annual dividend of $3.60 (yield of 0.97%), and the average daily trading volume is about 1.7 million shares.