Earnings Previews: Aurora Cannabis, General Mills, Stitch Fix

Sentiment on General Mills stock remains muted. Of 19 analysts covering the shares, 14 have a Hold rating and only two rate the shares at Buy or Strong Buy. The stock trades at around $75.25, above the median price target of $74.00. At the high target of $81.00, the implied upside is 9%.

Fiscal first-quarter revenue is forecast at $4.72 billion, down 3.6% sequentially but up about 4% year over year. Adjusted EPS are forecast at $1.00, down 10.6% sequentially and up a penny year over year. The current estimates for the 2023 fiscal year ending in May call for EPS of $4.00, up 1.6%, on sales of $19.46 billion, up about 2.5%.

General Mills stock trades at 18.8 times expected 2023 EPS, 17.7 times estimated 2024 earnings of $4.25 and 16.9 times estimated 2025 earnings of $4.46 per share. The stock’s 52-week range is $57.47 to $78.63. General Mills pays an annual dividend of $2.16 (yield of 2.87%). Total shareholder return for the past year was about 32.2%.

Stitch Fix

Online apparel retailer Stitch Fix Inc. (NASDAQ: SFIX) has seen its stock price drop by about 86% over the past 12 months. The stock tumbled to its 52-week low earlier this month and has added 18.2% since. The company cut jobs in the prior quarter, but gross margins remained low, likely due to rising transportation costs. Customer retention and Stitch Fix’s initiative to let customers buy directly rather than sort through a curated monthly collection will attract special interest from investors. The company reports results after markets close Tuesday.

Analysts are decidedly cool on the stock. Of 18 brokerages covering the shares, 15 have Hold ratings and just one rates the stock at Buy. At a share price of around $4.80, the upside potential based on a median price target of $7.00 is 45.8%. At the high target of $12.00, the upside potential is 150%.

Fiscal fourth-quarter revenue is forecast at $488.79 million, down 0.8% sequentially and 14.4% lower year over year. Stitch Fix is expected to post an adjusted per-share loss of $0.60, compared to a loss of $0.72 in the prior quarter and EPS of $0.19 per share a year ago. For the full fiscal year that ended in July, the adjusted net loss is currently forecast at $1.62, much worse than last year’s loss of $0.08 per share. Full-year revenue is forecast at $2.08 billion, down about 1% compared to the prior year.

Stitch Fix is not expected to post a profit in 2022, 2023 or 2024. The enterprise value to sales multiple in each of those years is 0.2. The stock’s 52-week range is $4.61 to $44.65. Stitch Fix does not pay a dividend, and the total shareholder return for the past year is negative 86.2%.

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