Investing

Earnings Previews: Conagra Brands, Levi Strauss, Tilray

There was just one earnings report of note Tuesday morning, and while PepsiCo beat on both the top and bottom lines, earnings guidance for the fiscal year did not quite meet estimates, leaving the stock with a small gain in early trading.

The other two companies we previewed Monday (Constellation Brands and RPM International) report quarterly results before markets open Wednesday.

Here is a look at three companies set to report results after markets close Wednesday or before Thursday’s opening bell. This is our last preview report for this week. We will be back next week with previews of quarterly earnings from most of the country’s biggest banks, the world’s largest chipmaker and many more as earnings season kicks into third gear.

Levi Strauss

Apparel maker Levi Strauss & Co. (NYSE: LEVI) has posted a share price gain of 79% over the past 12 months, including a 25% increase since the beginning of 2021. Quarterly revenue in the second quarter set a new record for the company, and expectations for the third quarter are high. Yet, since early April, the stock trades only about 2.7% higher, largely as a result of the company’s robust performance. Digital sales have been booming and analysts will be looking for solid operating profit gains to go along with what most expect to be another record-setting quarter.

All 13 analysts covering the stock have Buy or Strong Buy ratings on the shares. At a recent price of around $24.90, the implied upside based on a median price target of $34.50 is nearly 38%. At the high price target of $40, the implied upside is more than 60%.

Third-quarter revenue is forecast to come in at $1.48 billion, up 15.8% sequentially and up nearly 40% year over year. Adjusted earnings per share (EPS) are forecast at $0.38, up 63% sequentially and 375% year over year. For the full fiscal 2021, EPS are forecast to rise 537% to $1.34 and revenue is pegged at $5.74 billion, which would be up 29%.

The stock trades at 18.7 times expected 2021 EPS, 16.6 times estimated 2022 earnings and 14.8 times 2023 earnings. The 12-month forward multiple in the consumer cyclical sector is 11.87. Levi’s 52-week trading range is $14.60 to $30.84, and the company pays an annual dividend of $0.18 (yield of 0.72%).

Conagra Brands

Over the past 12 months, packaged food giant Conagra Brands Inc. (NYSE: CAG) has traded as much as 8% higher and 10% lower than in October of last year. Ahead of Wednesday morning’s fiscal first-quarter report, the stock trades down about 3.5%. Higher costs and divestitures weighed on gross margins and profits in the prior quarter, and the company said it would initiate cost savings and seek opportunities to raise prices to offset expected cost inflation of 9% for fiscal 2022. That may take more than just three months, however, so the outlook for the first quarter is muted.

Most analysts following the stock (10 of 16) have a Hold rating on the stock, while the rest rate the shares at Buy or Strong Buy. At a price of around $34.50, the upside potential based on a median price target of $37.50 is 8.7%. At the high price target of $41.50, the upside potential is more than 20%.

The consensus estimate for first-quarter revenue is $2.53 billion, down 7.6% sequentially and down 5.6% year over year. EPS are expected to come in at $0.49, down 10% sequentially and 30% year over year. The current estimates for the fiscal 2022 call for EPS of $2.46, down about 7%, on sales of $11.02 billion, about 1.5% lower.

The stock trades at 13.7 times expected 2022 EPS, 12.6 times estimated 2023 earnings and 12.0 times estimated 2024 earnings. The 12-month forward multiple in the consumer staples sector is 18.26. The stock’s 52-week range is $32.25 to $39.09, and Conagra pays an annual dividend of $1.25 (yield of 3.71%).

Tilray

Since its merger with Aphria in May, cannabis producer Tilray Inc. (NASDAQ: TLRY) has traded up as much as 35% and down by as much as 32%, the stock’s level early Tuesday morning. Like every other cannabis play, Tilray is waiting on the U.S. government to eliminate its classification of marijuana as a dangerous drug. The entire cannabis universe will get a big boost when that happens. Of course, the timing is anyone’s guess, and that’s what has every stock in the sector on the same downward trajectory as Tilray. The company reports first-quarter fiscal 2022 results before markets open Wednesday.

Of 20 brokerages covering the stock, 14 rate the shares at Hold. Another five have a Buy or Strong Buy rating. At the price of around $11.10, the upside potential based on a median price target of $14 is 26%. At the high price target of $27, the upside potential is 143%.

Analysts are expecting Tilray to post first-quarter revenue of $174.93 million, which would be up 23% sequentially and up 59% year over year. A projected loss per share of $0.05 is 37 cents worse than the prior quarter’s loss and two cents better than the year-ago loss. For the full fiscal year, analysts currently forecast a loss per share of $0.15, sharply better than last year’s loss of $0.93 per share. Revenue is forecast to total $796.66 million, up more than 55%.

Tilray is not expected to post a profit in fiscal 2022, 2023 or 2024. The stock trades at 65.9 times expected 2022 enterprise value-to-EBITDA, 38.4 times in 2023 and 24.6 times in 2024. The stock’s 52-week range is $4.87 to $67.00, and Tilray does not pay a dividend.