Investing

Earnings Preview: General Mills, Micron, Nike, Rite Aid

Nike

Over the past 12 months, shares of athletic gear maker Nike Inc. (NYSE: NKE) have added about 17% to their value. Over the past two years, the Dow Jones industrial average component has added about 66% to its share price, with most of the gain coming in 2020. Investors will be paying close attention to how Nike is managing its supply chain issues, which have affected both sales and inventory levels. Digital sales have been rising, and investors also expect to see growth in that area as well. Nike reports quarterly results after markets close on Monday.

Analyst sentiment on the stock is nearly unanimously positive, with 27 of 33 brokerages rating the stock at Buy or Strong Buy and five more having a Hold rating. At a share price of around $161.40, the upside potential based on a median price target of $184.38 is about 14.3%. At the high price target of $206, the implied upside is 27.6%.

For the company’s second quarter of fiscal 2022, revenue is expected to come in at $11.25 billion, down 8.1% sequentially and essentially flat year over year. Adjusted EPS are forecast at $0.63, down nearly 46% sequentially and 19.2% lower year over year. For the full fiscal year, current estimates call for EPS of $3.52, down about 1.1%, on sales of $47.11 billion, up about 5.8%.

Nike’s share price to earnings multiple for fiscal 2022 is 45.9. For fiscal 2023, the multiple to estimated EPS of $4.71 is 34.3, and for 2024, it is 29.0 times estimated EPS of $5.57. The stock’s 52-week range is $125.44 to $179.10. Nike pays an annual dividend of $1.22 (yield of 0.75%). Total shareholder return for the past year was 16%.

Rite Aid

Retail drugstore operator Rite Aid Corp. (NYSE: RAD) reports fiscal 2022 third-quarter results first thing Tuesday morning. Over the past 12 months, the share price has pulled back nearly 30%, including a share price spike to near $32.50 in late January. For the year to date, shares trade about 24% lower. Shares got a bit of a boost earlier this month on chatter that the company offered a good target for an activist investor. So far, no volunteers have stepped up.

Few analysts pay attention to the shares, and none rates the stock above a Hold. At a share price of around $12.10, the stock is trading a dime above its median price target. Upside potential based on a high price target of $15.00 is 24%. Rite Aid has lowered guidance in each of the two prior quarters after missing sales estimates in both quarters.

Third-quarter revenue is expected to come in at $6.28 billion, up about 2.8% sequentially and 2.6% year over year. The adjusted loss per share is forecast at $0.18, compared to a loss per share of $0.41 in the prior quarter and EPS of $0.40 in the third quarter of last year. For the full fiscal year, Rite Aid is expected to post a loss per share of $0.76 compared to last year’s loss of $0.15. Revenue is expected to increase by 3.9% to $24.98 billion.

Rite Aid is not expected to post positive EPS until fiscal 2024. The single analyst estimate for that year calls for EPS of $0.41, which represents a multiple to the share price of 29.6. The stock’s 52-week range is $11.50 to $32.48. Rite Aid does not pay a dividend. Total shareholder return for the past year was negative 39.5%.

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