Earnings Previews: Adobe, FedEx, General Mills, Stitch Fix

Stitch Fix

Online retailer Stitch Fix Inc. (NASDAQ: SFIX) has added more than 25% to its share price over the past 12 months, including a year-to-date tumble of nearly 40%. Some of the volatility is due to the pandemic, and some is due to the nature of a high-growth company.

Investors tend to pay more attention to the number of active buyers for subscription-based sellers like Stitch Fix and how much each of those subscribers spends. That leads to a look at cash flow, and Stitch Fix’s operating cash flow has been negative in each of the past two quarters. The company reports fourth-quarter fiscal 2021 results after markets close Tuesday.

Analysts are mixed on the stock with seven of 15 rating the shares a Hold and five rating the stock at Buy. At a price of around $32.55, the upside potential based on a median price target of $64.50 is 98%. At the high target of $84, the upside potential is $158%.

The revenue forecast is $548.01 million, up 2.3% sequentially and 23.6% year over year. Stitch Fix is expected to post an adjusted per-share loss of $0.14, compared to a loss of $0.18 in the prior quarter and a loss of $0.44 per share a year ago. For the full fiscal year, the adjusted net loss is forecast at $0.42, down from last year’s loss per-share loss of $0.66. Full-year revenue is forecast at $2.08 billion, up 21.5% compared to the prior year.

Stitch Fix is not expected to post a profit in 2021, 2022 or 2023. The enterprise value-to-sales multiple is 1.8 for 2021, 1.5 for 2022 and 1.3 for 2023. The stock’s 52-week range is $25.19 to $113.76. Stitch Fix does not pay a dividend.

General Mills

Before markets open on Wednesday, General Mills Inc. (NYSE: GIS) will report its first-quarter fiscal 2022 results. The stock has added about 6.4% over the past 12 months, including a year-to-date gain of around 2.9%.

Earlier this month, General Mills raised its guidance to the high end of a prior estimate of 1% to 3% in organic sales growth and the higher end of prior adjusted EPS guidance of down 2% to flat. The increases are the result of an acquisition of the pet treats business from Tyson Foods. Rising costs remain a weight, but the company is considering price and productivity increases to offset higher costs.

Analysts have taken a wait-and-see position on the stock, with 14 of 20 giving the shares a Hold rating and four more rating the stock a Buy or Strong Buy. At a price of around $58.90, the upside potential based on a median price target of $64 is about 8.7%. At the high price target of $71, the upside potential rises to more than 20%.

First-quarter revenue is forecast at $4.3 billion, down 4.9% sequentially and about 1.4% year over year. Adjusted EPS are expected to come in at $0.89, down 2.4% sequentially and down about 12.4% year over year. The current estimate for fiscal 2022 EPS is $3.74, down 1.3%, and sales are forecast at $17.91 billion, down about 1.2%.

The stock trades at 15.7 times expected 2022 EPS, 15.2 times estimated 2023 earnings and 14.6 times estimated 2024 earnings. The stock’s 52-week range is $53.96 to $64.65. General Mills pays an annual dividend of $2.04 (yield of 3.46%).

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