Investing

Earnings Previews: Kroger, Zscaler

After markets closed on Wednesday, GameStop, one of the stocks that introduced investors to the world of meme stocks, reported better-than-expected revenues but a wider per-share loss than forecast. The stock traded down about 8% early Thursday. Lululemon, which also reported earnings late Wednesday, beat the revenue estimate by nearly 10% and the profit estimate by more than 25%. Shares traded up more than 12% in early trading.

Our last earnings preview for this week looks at one company reporting results after markets close Thursday and another reporting before markets open on Friday.

Zscaler

Cloud security company Zscaler Inc. (NASDAQ: ZS) reports fourth-quarter fiscal 2021 results after the closing bell on Thursday. The share price has doubled over the past 12 months, including a jump of around 40% in 2021 alone. Last December, Zscaler got a boost when research firm Gartner named the company the sole secure web gateway to make Gartner’s magic quadrant.

Of 29 analysts covering the stock, 19 rate the shares a Buy or Strong Buy, and another nine rate the stock at Hold. At Tuesday’s closing price of $280.66, the stock had eclipsed its median price target of $259.50. At the high price target of $320, the upside potential for the share price was 14%.

Analysts are expecting fourth-quarter revenue of $187.44 million, up 6.3% sequentially and up 49% year over year. Adjusted earnings per share (EPS) are forecast to reach $0.09, down 39% sequentially and up 80% year over year. For the full fiscal year, Zscaler is expected to post EPS of $0.47, up 97% compared to 2020, on sales of $663.78 million, 54% higher year over year.

The stock trades at 597 times expected 2021 EPS, 510 times estimated 2022 earnings and 296 times expected 2023 earnings. The stock’s 52-week range is $120.34 to $293.44. Zscaler does not pay a dividend.

Kroger

Supermarket operator Kroger Co. (NYSE: KR) reports fiscal 2022 second-quarter results first thing on Friday. Shares have added just over 33% during the past 12 months, including a gain of 48% since the beginning of 2021. That 12-month share price increase is far better than Walmart’s 4.8% gain over the same period, but way short of Albertson’s 143% jump.

Analysts are mostly in a wait-and-see pattern on the stock. Of 27 brokerages covering the stock, 15 rate the shares a Hold and the other 12 are evenly divided between Buy and Sell ratings. At Wednesday’s closing price of $46.29, the shares had outrun the median price target of $40. At the high target of $50, the upside potential on the stock was about 8%.

Second-quarter revenue is forecast at $30.69 billion, which would be down nearly 26% sequentially and up less than 1% year over year. EPS is forecast to dip by 46% sequentially to $0.64, a drop of 12% year over year. For the full fiscal year, Kroger is expected to post EPS of $3.10, down almost 11%, on sales of $132.78 billion, up fractionally year over year.

The stock trades at 14.9 times expected 2022 EPS, 15.1 times estimated 2023 earnings and 14.6 times estimated 2024 earnings. The stock’s 52-week range is $30.35 to $47.99. Kroger pays an annual dividend of $0.84 (yield of 1.81%). Walmart’s dividend yield is 1.49% and Albertsons’ is 1.25%.