Investing

Earnings Previews: NXP Semiconductors, Take-Two Interactive, Transocean

The week just ending saw earnings reports from all five of the largest (by market cap) U.S.-based companies. All five are tech giants, and only one (Amazon) staggered a bit.

In the week of August 2, we shall be getting June-quarter results from several oil and gas exploration and production companies, along with some big health care firms and media companies. We already have previewed two stocks of interest that will report results before markets open Monday: Ferrari and ON Semiconductor.

Here are three companies reporting after Monday’s closing bell.

NXP Semiconductors

NXP Semiconductors N.V. (NASDAQ: NXPI) has seen its shares rise by 73% over the past 12 months. For the year to date, this Netherlands-based chipmaker has added 29% to its share price. Like every other chipmaker, NXP is selling everything it can manufacture and is likely to see a boost in operating margin and income as a result.

Of the 28 surveyed brokerages that the company, and 18 rate the shares at Buy or Strong Buy. Another nine have a Hold rating. At a recent price of around $204.10, the potential upside to the median price target of $231.50 is 13.4%. At the high price target of $250, the upside potential is 22.5%.

For the second quarter, analysts expect revenue to rise by less than 1% sequentially to $2.58 billion, but that would be up nearly 42% year over year. Adjusted earnings per share (EPS) are forecast to come in at $2.32, a penny more than in the first quarter, but 147% higher year over year. Current estimates for the full year call for EPS to improve by almost 58% to $9.68 and revenue to increase by nearly 23% to $10.58 billion.

The stock trades at 20.5 times expected 2021 EPS, 18.6 times estimated 2022 earnings and 16.7 times estimated 2023 earnings. The stock’s 52-week trading range is $114.77 to $216.43. NXP pays an annual dividend of $2.25 (yield of 1.10%).

Take-Two

Video game producer Take-Two Interactive Software Inc. (NASDAQ: TTWO) has added about 39% to its share price since January 2020. In early February of this year, the stock had added nearly 75% to its share price in 13 months. Since Roblox’s initial public offering in March, it has added more than 10% to its share price, about three times as much as Take-Two has added in the same period. Online gaming is hugely competitive and long-term success depends on growing the user base and booking more revenue. Take-Two has been doing that for a long time.

Of 25 analysts covering the stock, 17 rate the shares a Buy or Strong Buy, and the rest have a Hold rating. At a price of around $171.60, the stock’s potential upside to a median price target of $220 is about 28%. At the high price target of $264, the implied upside is nearly 54%.

Analysts expect Take-Two to post fiscal first-quarter revenue of $685.64 million, down 12.6% sequentially and about 32% year over year. The EPS forecast calls for $0.90, down 155%, from $2.30 a year ago. For the full fiscal year, EPS are forecast to fall by nearly 35% to $4.67, and revenue is expected to dip by 3.5% to $3.43 billion.

Take-Two stock trades at 37.1 times expected fiscal 2022 EPS, 25.6 times estimated 2023 earnings  and 21.1 times estimated 2024 earnings. The stock’s 52-week range is $151.00 to $214.91. Take-Two does not pay a dividend.

Transocean

Transocean Ltd. (NYSE: RIG) shares have added nearly 74% in the past 12 months, but the shares still trade down about 47% from their level in January of 2020. To put that in perspective, over the past 10 years, the stock has dumped about 93% of its value, a large chunk of it in the last half of 2014. Since oil prices began to rise late last year, however, the shares have added almost 270%. Transocean stock is heavily traded, with more than 25 million shares changing hands daily.

None of the 12 brokerages covering the company recommends buying the stock, and only seven rate the shares at Hold. At a price of around $3.60, the stock has outrun its median price target of $2.50. At the high target of $5.50, the upside potential on the stock is about 53%.

For the second quarter, analysts anticipate the company will report revenue of $676.75 million. That would be up 3.6% sequentially but down 37% year over year. The expected loss per share is $0.14, better than the $0.19 loss in the first quarter, but worse than the break-even quarter in 2020. For the full year, analysts expect a loss per share of $0.53, compared to the year-ago loss of $0.76, and sales of $2.66 billion, down nearly 16% year over year.

Transocean shares trade at 57.3 times expected 2021 EBIT, 103.3 times estimated 2022 EBIT and 67.0 times estimated 2023 EBIT. The stock’s 52-week range is $0.65 to $5.13. Transocean does not pay a dividend.