Investing

Earnings Previews: Lowe's, StoneCo, Target, TJX

StoneCo

StoneCo Ltd. (NASDAQ: STNE) provides fintech services to merchants and their partners in Brazil. The company is headquartered in the Cayman Islands and is a subsidiary of HR Holdings. Over the past 12 months, the shares have dropped about 53%, including a spike to a gain of around 45% in mid-February. For the year to date, including that spike, the stock is down about 39%.

At the end of June, Cathie Wood’s ARK Fintech Innovation ETF owned 585,570 shares of StoneCo stock. That investment more than doubled to 1.82 million shares as of September 30. By Friday’s close, the fund had pared its holdings to 1.77 million shares, valued at roughly $60 million.

Analysts are mostly bullish on the shares, with 10 of 16 giving the stock a Buy or Strong Buy rating while the other six rate it at Hold. At a price of around $30.60, the upside potential based on a median price target of $57.32 is 87%. At the high price target of $96.35, the upside potential is about 215%.

When StoneCo reports third-quarter results late on Tuesday, analysts are estimating revenue of $262.74 million, up 113% sequentially and 59% year over year. Adjusted EPS are forecast at $0.11, up from a loss per share of $0.09 in the prior quarter and down 39% year over year. For the full year, analysts are expecting EPS of $0.45, down 30.4%, on revenue of $825.8 million, up 29.2%.

StoneCo’s share price to earnings multiple for the 2022 fiscal year is 69.5. For the 2022 fiscal year, the multiple to estimated EPS of $1.00 is 35.9, and for 2023, it is 23.5 times estimated EPS of $1.32. The stock’s 52-week range is $28.40 to $95.12. StoneCo does not pay a dividend.

Target

Target Corp. (NYSE: TGT) is also reporting quarterly results before Wednesday’s opening bell. The company’s stock has added about 66% to its share price over the past 12 months, including a drop of 15% in early August. Since then the shares have managed only to pull back to even with the August peak.

The recent slowdown notwithstanding, Target’s share price growth has dwarfed competitor Walmart’s, which has seen its stock price rise by less than 1% over the past 12 months. The company has set a high bar for itself, and that piles up the pressure from investors for more, more, more. For Target, getting a share price bump may depend on how big a beat it can report on revenue and profits.

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