Investing

Earnings Previews: Carnival, Huya, Nike, Pinduoduo, Tencent Music

Paul Ausick

Published: March 18, 2022 12:54 pm

After markets closed on Thursday, FedEx reported quarterly results that missed earnings estimates by $0.06 a share (1.3%) but beat revenue estimates by nearly 10%. Costs related to the Omicron variant, wages and transportation rose, however. The low end of fiscal 2022 earnings guidance came in below the consensus estimate for earnings per share (EPS) of $2.58. Shares traded down about 6% shortly after Friday’s opening bell.

GameStop also reported results and missed EPS estimates by $2.70, posting a loss per share of $1.86, compared to the consensus estimate for EPS of $0.84. The stock traded down more than 5% Friday morning. Brazilian payment technology firm StoneCo missed EPS estimates as well, but it reshuffled senior management and said it expects margins to improve beginning in the current quarter following a pricing adjustment implemented in November.

Here are previews of five companies set to report quarterly results Monday or Tuesday.

Carnival

Cruise line operator Carnival Corp. & PLC (NYSE: CCL) is set to report results before markets open Tuesday. Over the past 12 months, the stock has dropped about 33%, including a decline of about 17% since mid-February. Rising fuel costs hit Carnival and the other cruise line operators hard, accounting for as much as 20% of operating costs. The industry got some good news earlier this week when the CDC lifted its conditional sailing order and lowered the risk levels for cruises.

Analysts continue to tilt toward a favorable view of Carnival, with eight of 20 analysts giving the shares a Buy or Strong Buy rating and another nine assigning a Hold rating. At a recent price of around $19.30 a share, the upside potential based on a median price target of $25.00 is nearly 30%. At the high target of $38.00, the upside potential is 97%.

For the company’s fiscal first quarter, analysts have forecast revenue of $2.26 billion, which would be up 75.3% sequentially and by nearly 10-times year over year. The adjusted loss per share is forecast at $1.21, better than the prior quarter loss of $1.72 and also better than last year’s quarterly loss of $1.79 per share. For the full 2022 fiscal year ending in November, Carnival is expected to post a per-share loss of $1.18, compared with last year’s loss of $7.06 per share. Revenue is forecast to reach $16.12 billion, up about 745% year over year. Carnival posted revenue of $4.79 billion in the quarter that ended in February 2020. Current projects call for November quarter 2022 revenue of $5.02 billion.

Carnival is expected to post EPS of $1.69 in its 2023 fiscal year and $2.36 in fiscal 2024. The stock’s 52-week range is $16.32 to $31.52. The company does not pay a dividend. Total shareholder return for the past year is a negative 31.9%.

Huya

Huya Inc. (NASDAQ: HUYA) will report fourth-quarter results first thing Tuesday morning. The Guangzhou, China-based firm operates live streaming game platforms in China, Southeast Asia and Latin America. Shares have dropped about 80% of their value over the past 12 months, largely due to the harsh rules imposed on tech stocks by the Chinese government. Two ARK Invest exchange-traded funds owned more than 10 million shares of Huya stock two years ago, but that position has since been entirely eliminated.
Analysts are mixed on the shares, with six of 16 brokerages covering the stock giving the shares a rating of Buy or Strong Buy. Another six rate the stock at Hold. At a share price of around $5.10, the upside potential based on a median price target of $8.04 is 57.6%. At the high price target of $23.03, the upside potential is more than 350%.

The consensus fourth-quarter revenue estimate is $453.04 million, down by 1.8% sequentially and 1.1% year over year. The estimated adjusted loss per share for the quarter is $0.23, compared to EPS of $0.12 in the prior quarter and $0.19 in the year-ago quarter. For the full fiscal 2021 year, analysts currently anticipate EPS of $0.22, down 72.3%, on sales of $1.79 billion, up 7.3%.

Huya is not expected to post a profit in 2022. Based on the current price, the EPS multiple for 2021 is 22.4 and the multiple for 2023 is 27.1 times estimated EPS of $0.19. The stock’s 52-week range is $3.23 to $25.67. The low was posted Tuesday. Huya does not pay a dividend. Total shareholder return for the past year was a negative 79%.

Nike

Over the past 12 months, shares of athletic gear maker Nike Inc. (NYSE: NKE) have declined by about 9.9%. Over the past two years, the Dow Jones industrial stock has added almost 89% to its share price, with most of the gain coming in 2020. Things to look for include recovery in China, digital direct-to-consumer sales, inflation and, of course, geopolitics. The company will report results after markets close on Monday.

Analyst sentiment on the stock is nearly unanimously positive, with 28 of 34 brokerages rating the stock a Buy or Strong Buy and six more having a Hold rating. At a share price of around $129.65, the upside potential based on a median price target of $170.00 is about 31.1%. At the high price target of $195.00, the implied upside is just over 50%.

For the company’s third quarter of fiscal 2022 that ended in February, revenue is expected to come in at $10.62 billion, down 6.5% sequentially but 2.5% higher year over year. Adjusted EPS are forecast at $0.72, down nearly 13.4% sequentially and flat year over year. For the full fiscal year ending in May, current estimates call for EPS of $3.63, up about 2%, on sales of $46.96 billion, up about 5.4%.

Nike stock trades at 35.7 times expected 2022 EPS, 27.6 times estimated 2023 earnings of $4.70 and 23.9 times estimated 2024 earnings of $5.42 per share. The stock’s 52-week range is $116.75 to $179.10. Nike pays an annual dividend of $1.13 (yield of 0.94%). Total shareholder return for the past year was a negative 8.8%.

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Pinduoduo

Pinduoduo Inc. (NASDAQ: PDD) is China’s largest tech company, and it matches farmers and agricultural products wholesalers directly with consumers. Like other tech companies, Pinduoduo stock has taken a beating over the past year, dropping nearly 72% of its share price value as a result of tighter government regulation.
On Monday, J.P. Morgan cut ratings and price targets on several Chinese tech firms, including Pinduoduo. On Tuesday, Chinese regulators announced that the tighter rules have had the desired impact on tech company misbehavior and would soon be relaxed. Shares of the tech stocks recovered their losses immediately. Pinduoduo is set to report results before Monday’s opening bell.

There are 40 analysts covering the stock, and 32 of them have given the shares a Buy or Strong Buy rating. Another seven rate the stock at Hold. At a share price of around $43.00, the upside potential based on a median price target of $95.68 is almost 123%. At the high price target of $157.12, the upside potential is 265%.

When the company reports fourth-quarter results Monday, analysts are expecting revenue of $4.71 billion, up 41.3% sequentially and 15.7% year over year. Adjusted earnings per share (EPS) are forecast at $0.37, up 10.5% sequentially and from a year-ago loss of $0.02 for the quarter. For full fiscal 2021, Pinduoduo is forecast to post EPS of $0.77, up from a loss per share of $0.38 in 2020, on sales of $15.36 billion, up 65.6%.

Pinduoduo shares trade at 55.6 times expected 2021 EPS, 35.1 times estimated 2023 earnings of $1.22 and 21.2 times estimated 2023 earnings of $2.03 per share. The stock’s 52-week range is $23.21 to $152.06. The company does not pay a dividend. Total shareholder return for the past year was a negative 69.7%.

Tencent Music

Tencent Music Entertainment Group Inc. (NYSE: TME) is China’s largest online music entertainment platform and a subsidiary of Tencent Holdings, which also owns WeChat. Over the past year, the share price has dropped by about 83.5%. The company reports quarterly results after markets close on Monday.

Reuters reported earlier this week that government regulations imposed more than a year ago on China’s tech giants are forcing Alibaba and Tencent Holding to fire about 50,000 workers. Tencent is expected to cut 10% to 15% of its total workforce of 94,000. Tencent Music employs about 4,800 people.

Sentiment on Tencent Music is decidedly lukewarm. Only seven of 20 analysts have a Buy or Strong Buy rating, while 11 others rate the shares at Hold. At a share price of around $4.50, the potential upside based on a median price target of $7.97 is about 77%. At the high target of $18.00, the implied upside is more than 300%.

Analysts expect the company to post fourth-quarter revenue of $1.2 billion, down less than 1% sequentially and about 6.3% lower year over year. Adjusted EPS are pegged at $0.08, down a penny sequentially and down 33% year over year. For the full 2021 fiscal year, EPS is forecast at $0.39, down 13.5%, on revenue of $4.92 billi9on, up 10.1%.

The stock trades at 11.5 times expected 2021 EPS, 12.3 times estimated 2022 earnings of $0.37 and 10.8 times estimated 2023 earnings of $0.42 per share. Tencent Music’s 52-week range is $2.95 to $32.25 a share. The company does not pay a dividend. Total shareholder return over the past 12 months was negative 84.3%.