Investing

Earnings Previews: Cleveland-Cliffs, Enbridge, Under Armour

Paul Ausick

Published: February 9, 2022 1:40 pm

Markets closed higher on Tuesday, primarily due to some buying action in the final hour of trading. Of the results we had previewed, Enphase, Globalfoundries and Chipotle beat estimates and got a boost in early trading Wednesday. Lyft also beat estimates but issued downside guidance, and the stock traded lower.

Among companies we previewed that reported results Wednesday morning, uranium miner Cameco and pot grower Canopy Growth beat estimates and traded higher, while CVS Health, which also beat top-line and bottom-line estimates, traded lower due to lower operating cash flow guidance.

On Tuesday we previewed four companies set to report results after markets close Wednesday: Disney, Fox, MGM Resorts and Uber. We also looked at four firms set to report results first thing Thursday morning: ArcelorMittal, Coca-Cola, Peabody Energy and Twitter. And we looked at four struggling growth stocks: Affirm, Aurora Cannabis, Cloudflare and Zillow.

Here is a look at three firms scheduled to report results before Friday’s opening bell.

Cleveland-Cliffs

Iron ore miner and steelmaker Cleveland-Cliffs Inc. (NYSE: CLF) has added about 18% to its share price over the past 12 months. Like all commodity producers, the company’s fortunes turned on the price it could get for its iron ore and, ultimately, its steel. Since last August, its share price had dropped almost 38% to a new 52-week low on January 27. In the past two weeks, the stock is up more than 26%. From its historic roots as an iron ore miner, Cleveland-Cliffs last year jumped on the steel train. It was highballing until it wasn’t.

Of 10 brokerages covering the stock, five have put a Buy or Strong Buy rating on the shares, and the other four rate the stock at Hold. At a recent share price of around $20.50 a share, the implied gain based on a median price target of $26.50 is 29.2%. At the high price target of $37, the upside potential is nearly 81%.

Analysts are forecasting fourth-quarter revenue of $5.65 billion, down 5.8% sequentially but up 150% year over year. Adjusted earnings per share (EPS) are forecast at $2.03, down 13.6% sequentially and up from $0.04 per share in the year-ago quarter. For the full 2021 fiscal year, analysts expect Cliffs to report EPS of $6.00 compared to a loss of $0.47 per share last year, on sales of $20.75 billion, up more than 287%.

The stock trades at 3.4 times expected 2021 EPS, 3.5 times estimated 2022 earnings of $5.83 and 7.7 times estimated 2023 earnings of $2.65 per share. The stock’s 52-week range is $12.77 to $26.51, and the company does not pay an annual dividend. Total shareholder return over the past year was 28.6%.

Enbridge

Energy infrastructure giant Enbridge Inc. (NYSE: ENB) has added more than 28% to its stock price over the past year. The Calgary-based company makes the news regularly as it battles with opponents to its oil pipelines and plans the company has to expand them.

The most recent point of contention is a $500 million project to build a tunnel under the Straits of Mackinac that separates Michigan’s upper and lower peninsulas. Opponents claim that the tunnel and the pipeline (known as Line 5) will be stranded assets by 2040. The company is said to have told state regulators that the line would operate for 99 years.

Of 25 brokerages covering the stock, 17 have put a Buy or Strong Buy rating, and the other eight rate it at Hold. At a share price of around $42.90 a share, the stock trades on top of its median price target of $42.87. At the high price target of $59.78, the upside potential is about 39%.

Analysts are forecasting fourth-quarter revenue of $6.35 billion, down 30% sequentially and 19.3% lower  year over year. Adjusted EPS are forecast at $0.60, up nearly 28% sequentially and 26.7% year over year. For full fiscal 2021, analysts expect Enbridge to report EPS of $2.24, up 17.6%, on sales of $34.6 billion, up 12.6%.

Enbridge stock trades at 19.2 times expected 2021 EPS, 17.3 times estimated 2022 earnings of $2.47 and 16.8 times estimated 2023 earnings of $2.56 per share. The stock’s 52-week range is $33.78 to $43.60, and the company pays an annual dividend of $2.69 (yield of 6.31%). Total shareholder return over the past year was 28.5%.

Under Armour

Sports apparel and gear maker Under Armour Inc. (NYSE: UAA) has dropped about 2.4% from its share price over the past 12 months. Rival Nike’s share price has increased by about 3.1% over the same period.

Where Under Armour’s stock once charted inversely to Nike’s and Lululemon’s, all three have been following a similar path since last August. The only difference is that Under Armour and Lululemon move more violently. The company’s outlook for its supply chain, its expenses and margins will have an outsized impact on how investors react to this quarterly report.

Sentiment on the stock is bullish, with 12 of 29 analysts rating the shares at Hold. Another 16 rate the stock a Buy or Strong Buy. At a share price of around $20.25, the upside potential based on a median price target of $28 is 38.3%. At the high target of $38, the upside potential is about 87.7%.

Fourth-quarter revenue is forecast at $1.47 billion, down 4.9% sequentially and 5.0% year over year. Adjusted EPS are forecast to come in at $0.07, down 79.0% sequentially and 41.7% year over year. For the full 2021 fiscal year, analysts have forecast EPS of $0.76, compared to a loss last year of $0.26, and revenue of $5.62 billion, up more than 25%.

Under Armour stock trades at 24.4 times expected 2021 EPS, 23.3 times estimated 2022 earnings of $0.80 and 20.0 times estimated 2023 earnings of $0.93 per share. The stock’s 52-week range is $17.52 to $27.28. Under Armour does not pay a dividend. Total shareholder return over the past year is negative 2.2%.

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