Investing

Earnings Previews: Constellation Brands, PepsiCo, RPM International

In a mid-September presentation, Constellation said it will go after high-end beer and wine sales, where sales are rising, and hard seltzer beverages, where sales have not been so hot. The company’s alliance with marijuana grower Canopy Growth could pay off big-time, if the U.S. Congress ever gets around to removing the federal ban on cannabis sales. Constellation reports second-quarter fiscal 2022 results before markets open on Wednesday.

Of 24 analysts covering the company, 17 rate the stock a Buy or Strong Buy, and the other have a Hold rating on the shares. At a price of around $214.90, the upside potential based on a median price target of $266 is 23.8%. At the high price target of $300, the upside potential rises to around 39%.

Analysts expect Constellation to report second-quarter revenue of $2.3 billion, up 13.6% sequentially and about 1.8% year over year. Adjusted EPS are pegged at $2.79, up 19.8% sequentially and three cents higher year over year. For the full fiscal year, current estimates call for EPS of $11.82, a 16.5% gain, and revenue of $8.58 billion, down about 0.4%.

The stock trades at 21.2 times expected 2022 EPS, 18.2 times estimated 2023 earnings and 16 times estimated 2024 earnings. The stock’s 52-week range is $160.63 to $244.75. Constellation pays an annual dividend of $3.04 (yield of 1.42%).

RPM International

Specialty chemicals maker RPM International Inc. (NYSE: RPM) reports first-quarter fiscal 2022 results before markets open Wednesday. Among its consumer brands are such familiar names as Rust-Oleum, Varathane and DAP. The stock posted a 52-week high in early May but has dropped by about 21% since then. Over the past 12 months, the shares are down about 3.3%.

RPM is a serial acquirer, and its fiscal 2021 cash spending of $326 million was about 50% higher than its acquisition cash spending in 2020. Over the past four quarters, RPM has posted higher-than-expected EPS in three and hit the target exactly in the fourth. Over the past 10 quarters, the company has met or exceeded EPS results every time.

Analyst sentiment on the stock is mixed. Eight of 12  brokerages covering the stock rate it a Hold, while three give the stock a Buy or Strong Buy rating. At a price of around $78.50, the upside potential based on a median price target of $95 is 21%. At the high price target of $105, the upside potential is about 33.8%.

For the company’s first fiscal quarter of 2022, analysts are forecasting revenue of $1.63 billion, down 6.3% sequentially and up about 1.2% year over year. EPS are forecast at $1.02, down 20.5% sequentially and down 29% year over year. The current estimates for the full fiscal year call for revenue of $6.34 billion, an increase of 3.8%, and EPS of $4.00, down 3.8%.

The stock trades at 19.6 times expected 2022 EPS, 16.9 times estimated 2023 earnings and 14.5 times estimated 2024 earnings. The stock’s 52-week range is $76.43 to $99.30. RPM pays an annual dividend of $3.52 (yield of 1.94%).

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