Investing

Earnings Previews: Academy Sports, GameStop, Lululemon

As always, earnings reports dried up last week ahead of the long holiday weekend. On top of that, the end of the September quarter also reduces significantly the number of companies reporting earnings.

That’s not to say the well has run dry. On the calendar for this week are a handful of reports that will get some attention from investors. Here is a look at two reporting after markets close Wednesday and one scheduled for Thursday morning.

GameStop

Arguably the stock that launched the meme stock phenomenon, video game retailer GameStop Corp. (NYSE: GME) is set to report fiscal 2022 second-quarter results after markets close Wednesday. Over the past 12 months, the stock is up more than 2,600%, thanks largely to a spike in late January. Since then, the stock has dropped 40%, less than half as much as it had lost during its mid-February slide. GameStop has been focused on reducing debt, so analysts and investors are now going to want to hear about how the business plans to grow.

Since the January run-up in the stock’s share price, only three analysts have had anything to say on the stock. Two rate the stock a Sell and one has a Hold rating. At a recent price of around $208, the stock trades at more than five times its median price target of $37.50 and more than four times the high price target of $50. GameStop’s fundamentals bear little resemblance to its stock price.

For the second quarter, revenue is forecast at $1.12 billion, down 12% sequentially and up 19% year over year. GameStop is pegged to post a per-share loss of $0.67, much worse than the first-quarter loss of $0.45 per share but less than half the $1.40 loss posted a year ago. For the full 2022 fiscal year ending next January, the company is expected to post a loss per share of $0.56, about 75% less than the fiscal 2021 loss of $2.14 per share.

GameStop is not expected to post a profit until fiscal 2024. The multiple at the stock’s current price is 147.3. The company’s enterprise value-to-sales ratio for the current fiscal year is 2.7, rising to 2.8 in 2023 and dipping back to 2.7 in 2024. The stock’s 52-week trading range is $5.87 to $483.00. GameStop does not pay a dividend.

Lululemon

Athletic apparel maker Lululemon Athletica Inc. (NASDAQ: LULU) is also scheduled to report results Wednesday afternoon. Over the past 12 months, the stock is up about 7.2%, but looking back to January of 2020, the shares are up about 68%. That’s slightly better than Nike’s gain of almost 64% and far better than Under Armour’s gain of about 7.2% for the same 20 months. But while Nike and Lululemon have both posted relatively modest gains of around 16% and 12%, respectively, Under Armour has surged by 35% so far in 2021.

Analysts at Cowen reiterated Tuesday morning their Outperform rating on Lululemon and raised their price target from $441 to $476 based on improving margins and the possibility that management will raise guidance despite higher freight costs. At a price of around $388 per share, the implied gain based on a median price target of $414.50 is 6.8%. At the high price target of $476, the upside potential is about 23%.

For the company’s fiscal second quarter, estimates call for revenue of $1.33 billion, up 8.4% sequentially and 47% year over year. Adjusted earnings per share (EPS) are expected to be $1.18, up two cents sequentially and up 59% year over year. For the full 2022 fiscal year, analysts are looking for EPS of $6.90, 47% year over year, and revenue of $5.97 billion, up 36%.

Lululemon stock trades at 56.3 times expected 2022 EPS, 46.2 times estimated 2023 EPS and 38.2 times estimated 2024 EPS. The stock’s 52-week range is $269.28 to $417.85. Lululemon does not pay a dividend.

Academy Sports

Sporting gear retailer Academy Sports and Outdoors Inc. (NASDAQ: ASO) has seen its share price soar by nearly 250% since its October 2020 IPO. Since late June, however, the stock is up by only about 5%, including a surge of 31% since August 9. Following that recent low, Jim Cramer said that he thought the stock was “inexpensive” and that he’d “be a buyer.” Wonder if he was?

Of 10 brokerages covering the firm, nine rate the stock a Buy or Strong Buy. At a price of around $45.70, the stock has outrun its median price target of $45. At the high price target of $50, the upside potential is about 5%.

Analysts expect Academy Sports to report second-quarter 2022 adjusted EPS of $0.69 on sales of $1.35 billion. Those estimates reflect a sequential growth of 5.3% in revenue and a 25% drop in EPS. The revenue estimate is flat with the year-ago quarter and the EPS estimate reflects a year-over-year decline of 25%. For the full year, estimates call for EPS of $4.71, up 23%, and revenue of $6.19 billion, up about 8.9%.

The stock trades at 9.7 times expected 2022 EPS, 10.4 times estimated 2023 earnings and 9.1 times estimated 2024 earnings. The stock’s post-IPO range is $12.05 to $45.91, and the high was posted early Tuesday morning. Academy Sports does not pay a dividend.