Investing

Earnings Previews: Bed Bath & Beyond, Constellation Brands, Walgreens and More

While the December-quarter earnings season does not get started until next week, there are several interesting reports due out this week from companies that follow calendar-agnostic fiscal years.

Stocks had a banner year in 2021. The S&P 500 added 27.7%, the Nasdaq Composite added 22.9% and the Dow Jones industrial average added 19.5%. This year got off to a good start Monday, with both the Dow and the S&P 500 posting new closing highs, and both put up new intraday highs shortly after Tuesday’s opening bell.

The five companies featured here are not adding or subtracting anything to or from those results. Yet, they are companies in different sectors that may indicate some direction going forward. All five will report quarterly results before markets open on Thursday.

Bed Bath & Beyond

At the end of the prior quarter, specialty retailer Bed, Bath & Beyond Inc. (NASDAQ: BBBY) had seen its share price rise by about 55% over the past 12 months. In the company’s third quarter, the stock dropped about 34%. Since that August reading, the stock is down about 45%, and over the past 12 months, the total decline is more than 14%. One could argue that the company’s meme stock status drove it to highs that its fundamentals could not maintain.

Analysts have noticeably cooled to the stock over the past few months. Of 20 brokerages covering the firm, eight have a Sell or Strong Sell rating on the shares while nine have given the stock a Hold rating. At a recent share price of around $15.20, the upside potential based on a median price target of $19 is 18.4%. At the high price target of $34, the upside potential is nearly 124%.

Bed Bath & Beyond is expected to post fiscal third-quarter revenue of $1.96 billion, which would be down 1.7% sequentially and 25.6% lower year over year. Earnings per share (EPS) is forecast at $0.01, down 76% sequentially and 87.5% year over year. For the full 2022 fiscal year ending in February, current estimates call for EPS of $0.79, compared to a loss per share of $0.98 last year. Revenue is expected to fall by nearly 12% to $8.15 billion for the fiscal year.

The stock trades at 19.0 times expected 2022 EPS, 9.85 times estimated 2023 earnings and 7.4 times estimated 2024 earnings. The stock’s 52-week range is $13.38 to $53.90, and the company does not pay a dividend. Total shareholder return over the past 12 months is −16.8%.

Conagra

Over the past 12 months, the share price of packaged food giant Conagra Brands Inc. (NYSE: CAG) has dipped by about 2.3%. Revenue and profits were lower year over year in the company’s October quarter, and Conagra said it would take cost-saving measures and opportunistically raise prices to offset inflationary pressure. We are about to find out if either of those things happened and if they helped.

Most analysts following the stock (11 of 16) have a Hold rating, while the rest rate the shares at Buy or Strong Buy. At a price of around $34.25 a share, the upside potential based on a median price target of $37.50 is about 9.5%. At the high price target of $42, the upside potential is nearly 23%.

The consensus estimate for fiscal second-quarter revenue is $3.02 billion, up 13.6% sequentially but up by less than 1% year over year. EPS are expected to come in at $0.68, up 35.6% sequentially and down 16% year over year. The current estimates for fiscal 2022 ending in May call for EPS of $2.46, down about 7%, on sales of $11.24 billion, up less than 1%.

The stock trades at 13.9 times expected 2022 EPS, 13.0 times estimated 2023 earnings and 12.3 times estimated 2024 earnings. Conagra’s 52-week range is $30.44 to $39.09, and the company pays an annual dividend of $1.25 (yield of 3.67%). Total shareholder return over the past 12 months is −1.8%.