Investing

Earnings Previews: Applied Materials, Foot Locker, Ross Stores, Workday

Fiscal 2022 third-quarter revenue for Foot Locker is forecast at $2.14 billion, down 6.1% sequentially but up 1.4% year over year. Adjusted EPS are forecast at $1.37, down 38% sequentially and up 13.2% year over year. For the fiscal year ending in January, Foot Locker currently is expected to report EPS of $7.01, up 150%, on revenue of $8.85 billion, up 17.3%.

Foot Locker’s share price to earnings multiple for the 2022 fiscal year is 8.5. For fiscal 2023, the multiple to estimated EPS of $7.37 is 8.5, and for 2024, it is 8.3 times estimated EPS of $8.00. The stock’s 52-week range is $36.94 to $66.71. Foot Locker pays an annual dividend of $1.20 (yield of 2.16%). The one-year total return to shareholders is around 41.7%.

Ross Stores

The past 12 months have been a bit rocky for apparel retailer Ross Stores Inc. (NASDAQ: ROST). In early May, shares were up about 20%, before plunging to a 12-month low of down 4% in mid-October. For the entire 12-month period, the stock is up about 8.3%. Free cash flow for the past 12 months totals just over $3 billion, and free cash flow per show is $8.46. Half that free cash flow total came in the third quarter of last year. That could be a key metric for investors when Ross reports results after markets close Thursday.

Analysts are mostly bullish on the stock, with 17 of 24 putting ratings of Buy or Strong Buy on the shares, and the rest giving the stock a rating of Hold. At a share price of around $119.20, the upside potential based on a median price target of $139 is 16.6%. At the high price target of $153, the upside potential is more than 28%.

For the third quarter of fiscal 2022, analysts expect Ross to report revenue of $4.35 billion, down 9.5% sequentially and up 16% year over year. Adjusted EPS are forecast at $0.77, down 44.6% sequentially and 24.5% lower year over year. For the full fiscal year, analysts are forecasting EPS of $4.50, up 474%, on sales of $18.64 billion, up nearly 49%.

Ross Stores’ share price to earnings multiple for the 2022 fiscal year is 26.4. For the 2023 fiscal year, the multiple to estimated EPS of $5.30 is 22.4, and for 2024, it is 20.2 times estimated EPS of $5.87. The stock’s 52-week range is $104.92 to $134.22. Ross pays an annual dividend of $1.14 (yield of 0.99%). Total shareholder return for the past year is about 8.4%.

Workday

Workday Inc. (NASDAQ: WDAY) saw its share price rise by about a third over the past 12 months. The company develops enterprise-level software applications for cloud-based computing. UBS recently upgraded the stock from Neutral to Buy and boosted the price target to $370, based on increased demand for Workday’s back-office human resources applications. Continuing growth in revenue and earnings will be key to investor reaction to Thursday afternoon’s report. If the company boosts its guidance, that could be a real plus.

Analysts are solidly bullish on Workday. Of 35 brokerages covering the stock, 29 rate the shares a Buy or Strong Buy, and five more rate the stock at Hold. At a share price of around $300.30, the upside potential based on a median price target of $310 is 3.2%. At the high target of $370, the upside potential is 13.2%.

Revenue for the company’s third quarter of fiscal 2022 is pegged at $1.32 billion, which would be 4.8% higher sequentially and up nearly 19% year over year. Adjusted EPS are forecast at $0.85, down nearly 31% sequentially and a penny lower year over year. For the fiscal year ending in January, analysts currently expect Workday to report EPS of $3.66, up 25%, on sales of $5.11 billion, up 18.2%.

Workday’s share price to earnings multiple for the 2022 fiscal year is 26.4. For the 2023 fiscal year, the multiple to estimated EPS of $3.52 is 85.3, and for 2024, it is 67.5 times estimated EPS of $4.46. The stock’s 52-week range is $204.86 to $307.80, and the high was posted earlier in the morning. Workday does not pay a dividend. Total shareholder return for the past year is about 32.7%.

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