Investing

Earnings Previews: Coupang, Snowflake, Splunk

Paul Ausick

Published: March 1, 2022 10:43 am

U.S. markets continue to be attuned to developments in Europe and Ukraine and what they could mean going forward. Energy stocks continue to trade higher, as crude oil prices continue rising (up about 7% currently) while financial stocks are threatened by a Russian ban on foreign companies from dumping their investments in the country.

Electric vehicle maker Lucid traded down about 12% early Tuesday, and another EV maker that reported results late Monday, Canoo, traded down about 7.3%. Velodyne Lidar beat expectations on both the top and bottom lines but issued downside revenue guidance for the first quarter

We already have previewed five earnings reports due out after markets close Tuesday (AMC, Nio, Nordstrom, Salesforce and SoFi) and three more due to report first thing Wednesday morning (Abercrombie & Fitch, Dollar Tree and Lithium Americas).

Here is a look at three companies scheduled to report quarterly results after Wednesday’s closing bell.

Coupang

South Korean e-commerce giant, Coupang Inc. (NYSE: CPNG), which came public in the United States almost a year ago, has seen its share price drop by about 46% since then. A combination of rising interest rates and deliberately high spending to boost market share had sent the stock down by around 38% in late January. Since then, shares have added 46.5%, and the year-to-date loss now stands at just below 10%. Quarterly revenue and Coupang’s outlook for the current quarter are likely to be the major influencers on investors following its earnings report.

Of 11 analysts covering the stock, five have a Buy or Strong Buy rating and another five rate the shares at Hold. At a recent price of around $26.50 a share, the upside potential based on a median price target of $30 is 13.2%. At the high target of $52, the upside potential on the stock is 96%.

The consensus estimate for fourth-quarter revenue is $5.18 billion, which would be up 11.5% sequentially. Coupang is also expected to post an adjusted loss per share of $0.19, equal to its loss in the prior quarter. For the full 2021 fiscal year, the adjusted loss per share is expected to be $0.82 on sales of $18.54 billion.

Coupang is not expected to post a profit in 2021, 2022 or 2023. The stock trades at a 2021 sales to enterprise value multiple of 2.4 times. The estimated multiple for 2022 is 1.8, and for 2023 it is 1.5. The stock’s post IPO range is $16.61 to $69.00. Coupang does not pay a dividend.

Snowflake

Over the past 12 months, data cloud platform provider Snowflake Inc. (NYSE: SNOW) has eked out a share price gain of around 2.4%. Considering that it was down nearly 28% in late May of last year, that’s not too bad. Given that it was up nearly 55% in mid-November, that is not too good.

Earlier this month, analysts at Morgan Stanley raised Snowflake’s rating to Overweight and its price target to $390, noting that its core business was outperforming and “significant [free cash flow] was within reach.” We are about to find out how far that reach is.
Analyst sentiment on Snowflake is positive, if not strongly favorable. Of 29 brokerages covering the stock, eight rate the shares at Hold and 21 have a Buy or Strong Buy rating. At a share price of around $265.70, the upside potential based on a median price target of $385 is 44.9%. At the high price target of $575, the upside potential is 116%.

Fiscal fourth-quarter revenue is forecast at $372.87 million, up 11.5% sequentially and nearly 96% year over year. Snowflake is expected to post adjusted earnings per share (EPS) of $0.03 in the quarter, down 16.7% (one penny) sequentially, but much better than the loss of $0.16 per share a year ago. For the full year that ended in January, Snowflake is expected to post a loss of $0.08, much better than last year’s loss per share of $1.55, on sales of $1.21 billion, up nearly 104%.

Snowflake’s sales to enterprise value multiple for the 2022 fiscal year is 63.3. For the 2023 fiscal year, the multiple to estimated sales of $2.01 billion is 38.1 and for 2024 it is 24.3 times estimated sales of $3.58 billion. The stock’s 52-week range is $184.71 to $405.00. CrowdStrike does not pay a dividend. Total shareholder return for the past year is negative 2.4%.

Splunk

Over the past 12 months, shares of real-time data collection and reporting platform Splunk Inc. (NASDAQ: SPLK) have dropped about 18%. The stock got a jolt of about 16% earlier this month on reports that Cisco had offered to acquire Splunk for $20 billion in cash. The offer, if it was indeed made, was rejected. Management turnover, pricing issues and shifting demands from the company’s traditional markets were cited as headwinds last week when JMP Securities downgraded the stock to Market Perform.

Analysts are bullish on the stock, with 26 of 40 giving Splunk a Buy or Strong Buy rating and the rest rating the shares at Hold. At a share price of around $116.70, the upside potential based on a median price target of $155 is 32.8%. At the high price target of $225, the upside potential is 92.8%.

For the fourth quarter of fiscal 2022 that ended in January, Splunk is expected to post revenue of $776.38 million, up 16.8% sequentially and 4.2% higher year over year. The estimated adjusted loss per share is $0.20, better than the prior quarter’s loss of $0.37 but sharply below the year-ago EPS of $0.38. For the full fiscal year, Splunk is expected to report a loss per share of $2.08, compared to last year’s loss of $0.55 per share, on sales of $2.56 billion, up 14.8%.

Splunk’s sales to enterprise value multiple for the 2022 fiscal year is 7.9. For the 2023 fiscal year, the multiple to estimated sales of $3.03 billion is 6.7, and for 2024, the multiple is 5.5 times estimated sales of $4.47 billion. The stock’s 52-week range is $105.45 to $176.66. Splunk does not pay a dividend. Total shareholder return for the past year is a negative 22.4%.

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