Investing

Earnings Previews: Abercrombie & Fitch, Dollar Tree, Lithium Americas

Paul Ausick

Published: February 28, 2022 1:20 pm

Last Updated: February 28, 2022 1:21 pm

While the Russian invasion of Ukraine continues and negotiations between the two countries have begun, U.S. companies will continue to report quarterly results this week. Events in Europe that are arguably far more important than company earnings may have a shorter, if sharper, impact on investors than do financial results and company outlooks for the future.

Several firms in the electric vehicle industry have reported or will report results Monday: Blink, Canoo, Lucid, Luminar and Velodyne Lidar. A major retailer, a leading PC maker and a struggling internet video conferencing firm are also on deck to report results after markets close Monday: HP, Sea Limited, Target and Zoom.

We also have previewed five earnings reports due out after markets close Tuesday: AMC, Nio, Nordstrom, Salesforce and SoFi.

Here is a look at three companies scheduled to report quarterly results before markets open on Wednesday.

Abercrombie & Fitch

Specialty retailer Abercrombie & Fitch Co. (NYSE: ANF) has added about 40% to its share price over the past 12 months. At around $38 in Monday trading, the share price is about 60% below its all-time high of more than $84 almost 15 years ago, but well above a two-year low of around $8. The company claims to be far more customer-focused and has had significant success getting its message out to its target market through TikTok. What A&F has given up is a lot of the unique features that most buyers recall from the past couple of decades.

Analysts are waiting to see if A&F’s putative comeback is the real deal. Five of 10 brokerages have given the stock a Buy rating and four more have a Hold rating. At the recent price of around $38.20 a share, the upside potential based on a median price target of $45.00 is 17.8%. At the high price target of $59.00, the upside potential is 54.4%.

Consensus estimates call for A&F to post revenue of $1.18 in the fourth fiscal quarter that ended in January. That would be up nearly 31% sequentially and 5.4% year over year. Adjusted earnings per share (EPS) are tabbed at $1.27, up 48% sequentially but down 15.3% year over year. For the full 2022 fiscal year just ended, analysts expect EPS of $4.50, miles above the posted loss per share last year of $0.73. Revenue for the year is forecast at $3.73, up 19.4% compared to the 2021 fiscal year.

A&F stock trades at around 8.5 times expected 2022 EPS, 9.7 times estimated 2023 earnings of $3.98 and 9.4 times estimated 2024 earnings of $4.10 per share. The stock’s 52-week range is $26.09 to $48.97, and the company does not pay a dividend. Total shareholder return for the past year was nearly 41%.

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Off-price retailer, Dollar Tree Inc. (NASDAQ: DLTR) has added around 45% to its share price over the past 12 months. Since bottoming out in late September, the stock is up about 69%. Rival Dollar General is up about 6.1% for the same 12-month period and down more than 6% since late September. Lifting its starting price from $1.00 to $1.25 may have lit a fire under investors, but shoppers have not responded with the same enthusiasm.

Analysts remain cautious. Of 27 brokerages covering the stock, 15 rate the stock at Hold and 11 have a Buy or Strong Buy rating. At a share price of around $142.90, the upside potential based on a median price target of $155 is 8.5%. At the high price target of $181.00, the upside potential is 26.7%.

Fourth-quarter 2022 revenue is forecast at $7.12 billion, up 10.9% sequentially and 5.2% higher year over year. Adjusted EPS are forecast at $1.77, up 84.5% sequentially and down nearly 17% year over year. For full fiscal 2022, analysts expect Dollar Tree to post EPS of $5.57, down 1.4%, on sales of $26.35 billion, up 3.3%.

Dollar Tree stock trades at 25.8 times expected 2022 EPS, 18.9 times estimated 2023 earnings of $7.62 and16.4 times estimated 2024 earnings of $8.77 per share. The stock’s 52-week range is $84.26 to $149.37. The company does not pay a dividend. Total shareholder return for the past year is 46.1%.

Lithium Americas

Lithium miner Lithium Americas Corp. (NYSE: LAC) has posted a share price gain of more than 56% over the past 12 months. The share price peaked in late November after the Canada-based firm received initial state approval to begin mining operations at its Thacker Pass site in northeastern Nevada. The state recently issued the last required permit, but federal approval is likely to be delayed until September. The company also has been studying a spinoff of its U.S. operations and maintaining its Argentinian mines.

Analysts are bullish on lithium in general and Lithium Americas in particular. Of 14 brokerages covering the stock, 12 have rated the shares a Buy or Strong Buy and the other two have a Hold rating. At a share price of around $29.30, the upside potential based on a median price target of $40.13 is 37%. At the high price target of $45.39, the upside potential is 54.9%.

Revenue estimates for the fourth quarter are not available, but analysts do expect the company to report a loss per share of $0.09, half as large as the prior quarter loss and less than the year-ago loss of $0.13 per share. For full fiscal 2021, the company is expected to post a loss of $0.50, larger than last year’s loss of $0.37 per share.

Lithium Americas is expected to post revenue of $106.38 million in fiscal 2022 and $312.23 million in fiscal 2023. The enterprise value to sales multiple for 2022 is estimated at 33.6 and for 2023 at 11.5. The company’s 52-week range is $11.84 to $41.56, and Lithium Americas does not pay a dividend. Total shareholder return for the past year was 55.7%.

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