Investing

Earnings Previews: Amazon, Apple, Starbucks, US Steel

Starbucks

In March of last year, shares of Starbucks Corp. (NASDAQ: SBUX) traded down about 35% for the first several weeks of 2020. The stock has recovered virtually all that loss and trades up about 29% over the past 12 months. From the March 2020 trough, the share price has more than doubled.

More people going shop or to work has helped boost the company’s business this year, and as more and more U.S. workers return to their offices, Starbucks should see an increase in sales. The resurgence of the coronavirus slowed the Starbucks recovery, but that’s just temporary.

Analyst sentiment is mixed on the stock, with 15 putting a Hold rating on the stock and an equal number assigning a Buy rating. The other five ratings are all Strong Buy. At the price of around $113.50, the upside potential based on a median price target of $130 is 14.5%. At the high price target of $145, the upside potential is 27.8%.

For the company’s fourth quarter of fiscal 2021, analysts are expecting revenue of $8.22 billion, up 9.7% sequentially and by nearly 33% year over year. Adjusted EPS are pegged at $1.00, down 1.4% sequentially and up 96% year over year. For the full fiscal year, EPS are forecast at $3.22, up 176%, on sales of $29.13 billion, up 24%.

Starbucks stock trades at 35.6 times expected 2021 EPS, 30.9 times estimated 2022 earnings and 27.3 times estimated 2023 earnings. The stock’s 52-week range is $85.45 to $126.32. Starbucks pays an annual dividend of $1.96 (yield of 1.71%).

U.S. Steel

Steel prices have dropped sharply over the past couple of weeks, and steel rebar futures have fallen from around $923 per metric ton to around $758. Other forms of steel have seen similar declines. In mid-August, shares of United States Steel Corp. (NYSE: X) traded more than 200% above their level at this time last year. The stock is still up about 150% for the past 12 months, and a recent downgrade to Sell didn’t cause much lasting damage. The stock is up about 12% for the month of October.

U.S. Steel is not covered by many analysts. Of 11 brokerages surveyed, only three rate the stock at Buy or Strong Buy. That’s one less than with a Sell or Strong Sell rating. Four analysts rated the stock at Hold. At a price of around $23.70, the upside potential to a median price target of $26 is 9.7%. At the high target of $50, the upside potential is 111%.

Third-quarter revenue is expected to come in at $5.75 billion, up 14.5% sequentially and 146% year over year. Adjusted EPS are forecast at $4.93, up 46% sequentially and far better than the year-ago quarterly loss of $1.21. For fiscal 2021, analysts expect U.S. Steel to post EPS of $14.58, compared to the year-ago loss of $4.67, on sales of $20 billion, up 105%.

U.S. Steel stock trades at 1.7 times expected 2021 EPS, 3.7 times estimated 2022 earnings and 7.6 times estimated 2023 earnings. The stock’s 52-week range is $8.96 to $30.57, and the company pays an annual dividend of $0.04 (yield of 0.16%).