Earnings Previews: Bath & Body Works, Cisco Systems, SQM 

The three major U.S. equity indexes closed higher on Monday. The Dow Jones industrials added 0.45%, while the S&P 500 rose by 0.4%, and the Nasdaq climbed 0.62%. Eight of 11 sectors ended the day higher, led by defensive favorites consumer staples (1.0%) and utilities (0.8%). Energy stocks fell by 1.9% following news that China is easing its lending rates. Crude oil dropped below $90 a barrel and continued sliding in early trading Tuesday. All three major indexes traded lower in Tuesday’s premarket.

Before U.S. markets opened on Tuesday, Walmart beat analysts’ expectations on both the top and bottom lines. The company also raised fiscal year guidance. Shares traded up by about 3.7%.

Home Depot beat consensus estimates for earnings per share (EPS) and revenue, and it reaffirmed previous guidance. Transaction numbers were down 3% but average ticket size was up 9.1%. The shares traded down about 2.5%.

Sea Limited missed the consensus revenue estimate while posting a smaller-than-expected loss. The company said it would stop providing fiscal year 2022 GAAP revenue guidance. Investors were not amused, and the stock traded down about 6.6% Tuesday.

Genius Sports beat analysts’ consensus revenue estimate and posted a smaller-than-expected quarterly loss. Shares traded up 5.7% in Tuesday’s premarket.

Check out our preview of Lowe’s, Target and TJX, all scheduled to report results first thing Wednesday morning.

Here, we preview expectations for three companies set to report quarterly results after Wednesday’s close.

Bath & Body Works

It has been a year now since the company formerly known as L Brands spun off its Victoria’s Secret business and renamed itself Bath & Body Works Inc. (NYSE: BBWI). Over that period, its stock slumped to a 52-week low last month and closed on Monday nearly 35% lower for the year. The company cut its second-quarter and full-year guidance in mid-July, citing inflationary pressures both on its customers and on its own operations.

Of 22 analysts covering the firm, 18 have a Buy or Strong Buy rating, and the other seven rate the stock at Hold. At a recent trading price of around $39.20 a share, the upside potential based on a median price target of $44.00 is 12.2%. Using the high price target of $82.00, the upside potential is 109.2%.

Second-quarter revenue is forecast at $1.61 billion, which would be up 11.3% sequentially but down almost 50% year over year. Analysts expect adjusted EPS of $0.41, down about 36% sequentially and 69.4% lower year over year. For the full fiscal year ending in January, analysts estimate EPS of $2.90, down 35.7%, and revenue of $7.37 billion, down 6.4%.

Bath & Body Works stock trades at 10.6 times expected 2023 earnings, 9.0 times estimated 2024 earnings of $4.33 and 7.3 times estimated 2025 earnings of $5.36 per share. The stock’s 52-week trading range is $25.75 to $82.00, and the company pays an annual dividend of $0.80 (yield of 2%). Total shareholder return for the past year was negative 34.7%.

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