Investing

Earnings Previews: BlackBerry, CarMax

This will be our last scheduled preview report for 2021. There are no notable earnings reports scheduled for release until the first full week of January.

Two companies we previewed last Thursday reported results Monday morning. Carnival Cruise Lines missed on both the top and bottom lines as the company continues to battle the effects of the coronavirus pandemic. Blade Air Mobility beat revenue estimates and its per-share loss was slightly worse than expected.

After markets close Monday and before they open again Tuesday, we shall be hearing reports from Nike, Micron, General Mills and Rite Aid.

Here is a look at two notable reports due later this week.

BlackBerry

After touching a high of nearly $29 in late January, BlackBerry Ltd. (NYSE: BB) shares have dropped about two-thirds of their value to trade at around $9 a share. The company reports results after markets close Tuesday.

Once a giant among cell phone makers, the company’s transition to a security software provider and supplier of an automobile software platform (QNX) has been, to be kind, rocky. Still, it continues to make inroads in the automobile sector, signing a deal with BMW for QNX and assigning a team of engineers to help the German carmaker achieve Level 2 of driving automation capability. BlackBerry’s comeback may take more time, but it is far from a hopeless case.

The company gets little attention from analysts, and most of that is negative. Of 10 brokerages covering the stock, eight have a Sell or Strong Sell rating on it and none has a Buy rating. At a recent price of around $9.10 a share, the stock traded above the median price target of $8.20 and offered upside potential of almost 10%, based on the high price target of $10.

Third-quarter fiscal 2022 revenue is forecast at $176.58 million, which would be up 0.9% sequentially but down nearly 27% year over year. BlackBerry is expected to post an adjusted loss per share of $0.07, a penny worse sequentially and down from earnings per share (EPS) of $0.02 in the year-ago quarter. For the fiscal year ending in February, the company is forecast to post a loss per share of $0.21, compared with EPS of $0.18 a year ago. Revenue is projected to drop by 18.7% to $726.01 million.

BlackBerry is expected to post a loss per share of $0.03 in its 2023 fiscal year, before posting EPS of $0.25 in fiscal 2024. The stock’s 52-week range is $6.52 to $28.77. BlackBerry does not pay a dividend. Total shareholder return for the past year is 10.2%.

CarMax

Although shares of CarMax Inc. (NYSE: KMX) traded down about 15% from their 52-week high, the stock has still managed to post a 12-month share price gain of around 35%. The company is expected to report quarterly results first thing Wednesday morning.

The used car dealership sells, services and finances purchases at more than 200 locations around the United States. Used car prices have risen about 40% in the past year and the average price for a used car has surpassed $27,000 for the first time, according to data from Cox Automotive. CarMax has far outperformed online-only competitors like Carvana (down 19% in the past year) and Vroom (down about 74%).

Of 18 analysts covering the stock, 12 have a Buy or Strong Buy rating and another five have a Hold rating on the shares. At a share price of around $133, the upside potential based on a median price target of $159 is 19.6%. At the high price target of $185, the upside potential is 39%.

Third-quarter revenue is forecast at $7.32 billion, down 8.4% sequentially but 41% higher year over year. Adjusted EPS are expected to come in at $1.46, down 15.4% sequentially and up 2.8% year over year. For full fiscal 2022, ending in February, CarMax is expected to report EPS of $7.18, up 58.9%, on sales of $29.77 billion, up 57.1%.

CarMax’s share price to earnings multiple for the 2022 fiscal year is 18.4. For fiscal 2023, the multiple to estimated EPS of $7.34 is 18.1, and for 2024, it is 17.4 times estimated EPS of $7.64. The stock’s 52-week range is $90.30 to $155.98. CarMax does not pay a dividend. Total shareholder return for the past year was 35%.

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