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. The three major indexes traded mixed shortly after Tuesday’s opening bell.
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 5.5%.
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 about 1.2% higher.
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 6.7% Tuesday.
Genius Sports beat analysts’ consensus revenue estimate and posted a smaller-than-expected quarterly loss. Shares traded about 1.9% early Tuesday.
Check out our preview of Lowe’s, Target and TJX, all scheduled to report results first thing Wednesday morning. We also have previewed results due after U.S. markets close Wednesday from Bath & Body Works, Cisco Systems and SQM.
Here is a look at what to expect from four companies set to report quarterly results before Thursday’s opening bell.
Canaan Inc. (NASDAQ: CAN) is a producer of supercomputing processors and a manufacturer of digital blockchain computing equipment. It is also a provider of the overall scheme for digital blockchain computer software and hardware. As such, the company offers indirect exposure to Bitcoin. The Hangzhou-based company has seen its share price decline by about 537% over the past 12 months, while Bitcoin has declined by about 50%.
Only four analysts cover Canaan, and all have a Buy or Strong Buy rating. At the recent trading price of around $4.30 a share, the upside potential based on a median price target of $8.42 is 95.8%. At the high price target of $11.00, the upside potential is about 156%.
Second-quarter revenue is forecast at $254.09 million, which would be up 18.8% sequentially. Analysts expect adjusted EPS of $0.40, down about 20.6% sequentially. For the full fiscal year, analysts estimate EPS of $1.15 and revenue of $777.77 million. Prior year data is unavailable.
Canaan stock trades at 3.7 times expected 2022 earnings, 3.1 times estimated 2023 earnings of $1.37 and 2.9 times estimated 2024 earnings of $1.50 per share. The stock’s 52-week range is $2.56 to $11.19, and the company does not pay a dividend. Total shareholder return for the past year was negative 53.7%.
Department store operator Kohl’s Corp. (NYSE: KSS) has posted a 12-month share price decrease of about 39.3%. After beating back an activist investor’s April effort to replace the majority of its board, Kohl’s rejected a June buyout offer of $53 a share from Franchise Group, owner of Vitamin Shoppe. The offer had been reduced from $60 a share in June due to then-soaring inflation. At the same time, the store lowered its second-quarter revenue guidance.
Of 16 analysts covering the stock, just four rate the shares at Buy or Strong Buy. Nine have Hold ratings on the stock. At a share price of around $33.10, the stock trades above its median price target of $32.50 is 17.4%. At the high price target of $58.00, the upside potential is about 75.2%.
For the retailer’s second quarter of fiscal 2023, analysts are looking for revenue of $3.91 billion, up 12.5% sequentially but down 7.3% year over year. Adjusted EPS are forecast at $1.12, up more than 900% sequentially and down almost 55% year over year. For the full 2023 fiscal year ending in January, analysts currently forecast EPS of $4.19, down 42.8%, on sales of $17.78 billion, down 3.7%.
Kohl’s stock trades at 7.9 times expected 2023 EPS, 6.8 times estimated 2024 earnings of $4.86 and 5.8 times estimated 2025 earnings of $5.68 per share. The stock’s 52-week range is $26.077 to $64.38. Kohl’s pays an annual dividend of $2.00 (yield of 6.03%). Total shareholder return over the past year was negative 37.4%.
China-based NetEase Inc. (NASDAQ: NTES) operates online gaming, communications and commerce services in China and elsewhere. It also owns another U.S.-traded online services company, Youdao. Over the past 12 months, the stock has added about 3.1% to its share price. NetEase trades American depositary receipts (ADRs) in the United States. One ADR is equal to five ordinary shares traded in Hong Kong.
Earlier this month, NetEase and Activision Blizzard scrapped a smartphone version of World of Warcraft after disagreeing on the terms of the project. Activision denied any disagreement and NetEase had no comment. Could Microsoft’s pending acquisition of Activision have figured into the decision?
All 25 brokerage houses covering the stock have a Buy or Strong Buy rating. At a share price of around $92.40, the stock’s implied gain based on a median price target of $125.27 is 35.6%. At the high price target of $147.55, the upside potential is almost 60%.
Analysts are forecasting second-quarter revenue of $3.43 billion, down 7.8% sequentially and up 7.9% year over year. The estimate for adjusted EPS of $1.05 is down by a penny sequentially and up by about 8.2% year over year. For the full 2022 year, analysts are looking for EPS of $4.56, down 2.1%, on a year-over-year sales increase of 5.9% to $14.6 billion.
NetEase ADRs trade at 20.3 times expected 2022 EPS, 17.4 times estimated 2023 earnings of $5.30 and 15.8 times estimated 2024 earnings of $5.83 per ADR. NetEase’s 52-week range is $68.62 to $118.19, and the company pays an annual dividend of $1.19 (yield of 1.29%). Total shareholder return for the past year was about 4.4%.
Luxury goods maker and retailer Tapestry Inc. (NYSE: TPR) posted its 52-week high way back in mid-November. Since then the shares have dropped nearly 21% despite the company’s own predictions of 15% to 20% revenue growth this year.
The companies leading brands (Kate Spade, Coach, Stuart Weitzman) have significant pricing power and have reduced the impact of inflation on revenue and margins. Tapestry also expects sales in China to rise, but that might be a bit uncertain now, given the general, non-coronavirus-related economic slowdown in the country.
Of 23 analysts covering the stock, 17 have a Buy or Strong Buy rating while the rest rate the shares at Hold. At a share price of around $36.20, the stock’s implied gain based on a median price target of $45.00 is 24.3%. At the high price target of $60.00, the upside potential is around 65.7%.
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