Earnings Previews: American Eagle Outfitters, Bilibili, FuelCell Energy, GameStop

The three major U.S. equity indexes closed lower last Friday. The Dow Jones industrials and the S&P 500 both dropped by 1.07%, and the Nasdaq fell by 1.31%. Ten of 11 sectors ended the day with losses, ranging from 1.9% (communications services) to 0.1% (materials). The single winner, energy, added 1.8%.

Friday’s report on nonfarm payrolls perked up investors until about noon, when a report that Russia would not reopen the Nord Stream 1 gas pipeline as it had promised sent stocks tumbling. All three major indexes traded higher before Tuesday’s opening bell.

U.S. markets were closed Monday, and no earnings reports were released, nor were any due out Tuesday morning. After Tuesday’s close today and before markets open again on Wednesday, Coupa Software, GitLab, Uipath, Academy Sports and Nio will be reporting quarterly results.

Here is a look at what to expect from four companies posting results after markets close Wednesday or before they open on Thursday.

American Eagle Outfitters

Apparel retailer American Eagle Outfitters Inc. (NYSE: AEO) has seen its share price plunge by almost 59% over the past 12 months. Since posting a 52-week high in mid-November, the stock has dropped 60%.

The peak came shortly after the company announced a $350 million all-cash deal to acquire Quiet Logistics. It was American Eagle’s second logistics-related acquisition of 2021 and reflected the company’s move to add to its revenue stream by offering its logistics services to other, smaller firms. The jury is still out on that one, but retail sales are not expected to have improved much in the previous quarter. American Eagle reports after markets close on Wednesday.

Of 11 analysts covering the stock, just three rate the shares at Buy or Strong Buy, while another six rate the stock at Hold. At a recent price of around $11.15 a share, the stock’s upside potential based on a median price target of $13.00 is about 16.6%. At the high price target of $17.00, the implied upside is 52.5%.

Second-quarter fiscal 2023 revenue is expected to come in at $1.2 billion, which would be up 13.5% sequentially but flat year over year. Adjusted earnings per share (EPS) are forecast to slide by 15.6% sequentially to $0.14 and tumble by almost 77% year over year. For the full year, analysts expect EPS of $1.05, down 52.4%, on sales of $5.04 billion, up 0.6% year over year.

The stock trades at 10.7 times expected 2023 EPS, 8.8 times estimated 2024 earnings of $1.27 and 7.5 times estimated 2025 earnings of $1.49. The stock’s 52-week range is $10.82 to $29.19, and American Eagle pays an annual dividend of $0.72 (yield of 5.74%). Free cash flow was negative $167 million in the first quarter, and a similar result in the second quarter could put pressure on the dividend. Total shareholder return for the past year was negative 57%.

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