Investing

Earnings Previews: Kinross Gold, Unity Software, Wynn Resorts

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The three major U.S. equity indexes closed higher again Monday. The Dow Jones industrials ended the day up 0.13%, the S&P 500 closed 0.09% higher and the Nasdaq saw a gain of 0.25%. Eight of 11 sectors closed higher, with communications services (1.83%) and energy (1.73%) posting the biggest gains. Utilities (−1.94%) had Monday’s poorest showing.
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This week’s economic calendar includes the monthly report on the consumer price index (CPI). Economists are expecting the Thursday morning release to show that the index increased month over month in October by 0.7%. Core CPI (which excludes food and energy) is expected to tick down from 0.6% to 0.5%. The weekly report on new claims for unemployment insurance will be released Thursday as well. New claims are expected to rise from last week’s 217,000 to 220,000.

The three major indexes traded higher in Tuesday’s premarket session.

After U.S. markets closed Monday, Lyft reported better-than-expected earnings per share (EPS) but missed the consensus revenue estimate. Ridership numbers for the quarter were lower than expected and remained below pre-pandemic levels. Shares traded down by around 17% in Tuesday’s premarket action.

Activision Blizzard beat consensus estimates on both the top and bottom lines. The pending $70 billion acquisition by Microsoft makes this kind of a so-what moment, though. Shares still traded about $23 below the buyout price of $95. The stock traded up by less than 1% Tuesday morning.

Before markets opened Tuesday morning, Constellation Energy reported a much worse-than-expected loss per share, while at the same time easily beating the consensus revenue estimate. Operating and maintenance costs soared, however. Shares traded down about 1.6% in Tuesday’s premarket.

GlobalFoundries beat consensus estimates on the top and bottom lines. Fourth-quarter EPS guidance was above estimates, while revenue guidance was in line with expectations. Shares traded up about 3% Tuesday morning.


After markets close Tuesday, Affirm, AMC Entertainment and Disney will report quarterly results, as will Lucid, Occidental Petroleum and Plug Power. Look for Canopy Growth, D.R. Horton, and Hecla Mining to share their results before U.S. markets open on Wednesday.

Here is a preview of three companies set to report quarterly results before U.S. markets close on Wednesday.

Kinross Gold

Over the past 12 months, the price of gold has declined by about 8.7%. Shares of miner Kinross Gold Corp. (NYSE: KGC) have fallen by almost 38%.
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Gold miners, like oil producers, have been trying to keep investors happy with buybacks, and investments in new development have been minimized. That is a good set-up for mergers and acquisitions. The recent bidding war between South Africa’s Gold Fields and two Canada-based miners for Yamana may be the first evidence of what could become a trend. Kinross, with a market cap of around $4.9 billion, is more likely to be a target than an acquirer. In the fight over Yamana, the premium to shareholders looks to be settling around 15%.

Analysts are mostly bullish on Kinross stock, with 12 of 17 brokerages having a Buy or Strong Buy rating, while the rest rate the shares at Hold. At a recent price of around $3.90 a share, the upside potential based on a median price target of $6.47 is about 65.9%. At the high price target of $7.81, the upside potential is 100%.

Third-quarter revenue is forecast at $1 billion, up 21.5% sequentially but down 15.9% year over year. Adjusted EPS are forecast at $0.06, up 90.3% sequentially and down a penny year over year. For the full 2022 fiscal year, estimates call for EPS of $0.24, down 43.2%, on sales of $3.36 billion, down 1.9%.

Kinross stock trades at 11.5 times expected 2022 earnings, 13.0 times estimated 2023 earnings of $0.30 and 16.7 times estimated 2024 earnings of $0.23 per share. The stock’s 52-week trading range is $3.00 to $7.13. The company pays an annual dividend of $0.12 (yield of 3.08%). Total shareholder return for the past year was negative 36.4%.

Unity Software

Real-time 3D video development platform maker Unity Software Inc. (NYSE: U) has seen its share price decline by nearly 85% over the past 12 months.

Shares got a nice bounce following the announcement of Unity’s acquisition of ironSource, but that did not last, and the stock posted a 52-week low on Monday, the day the deal for ironSource closed. The closing triggers a $2.5 billion share buyback program, which management said is expected to reduce dilution caused by the transaction. The all-stock transaction was valued at $4.4 billion and included $1 billion in convertible shares hoovered up by Silver Lake and Sequoia.

Of 19 analysts covering the stock, 13 have a Buy or Strong Buy rating and four rate the shares at Hold. At a share price of around $24.80, the upside potential to the median price target of $52.55 is 112%. At the high target of $105.00, the upside potential is more than 323%.
Third-quarter revenue is expected to rise sequentially by 9.8% to $326.09 million and to rise about 13.9% year over year. The consensus estimate calls for a loss per share of $0.15 compared to a loss per share of $0.18 in the prior quarter and worse than a loss of $0.06 per share in the year-ago quarter. For the full year, analysts now expect Unity to post a loss per share of $0.43, worse than the year-ago loss of $0.22. Revenue is expected to rise by around 18.8% to $1.32 billion.
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Unity is not expected to post a profit until 2024. The stock’s enterprise value to sales multiple for 2022 is 5.7. For 2023 and 2024, the multiple is 4.5 and 3.6, respectively. The stock’s 52-week range is $24.06 to $210.00. The company does not pay a dividend, and the total shareholder return for the past year was negative 84.8%.

Wynn Resorts

Shares of casino operator Wynn Resorts Ltd. (NASDAQ: WYNN) have dropped nearly 24% over the past 12 months. The better news is it could have been worse. In the first five weeks of the current quarter, shares have risen by nearly 15% as a result of two pieces of good news.

First, billionaire investor Tilman Fertitta revealed a 6% stake in the company. The second bit of good news arrived Monday, following a report that China finally may give up its zero-covid policy and loosen its strict lockdowns. There may be less there than meets the eye, but investors would like to have some good news from China, and they are hoping this is it.


Of 14 analysts covering the stock, half have a Buy or Strong Buy rating and the rest rate the shares at Hold. At a price of around $72.30 a share, the upside potential to the median price target of $77.00 is 6.5%. At the high target of $117.00, the upside potential is 61.8%.

Third-quarter revenue is expected to reach $867.42 million, up 4.6% sequentially but 12.8% lower year over year. The consensus estimate calls for a loss per share of $1.01, compared to a loss per share of $0.82 in the prior quarter and better than a loss of $1.24 per share in the year-ago quarter. For the full year, analysts now expect Wynn to post a loss per share of $3.74, much better than the year-ago loss of $6.12. Revenue is expected to rise by around 1.7% to $3.83 billion.

Wynn stock trades at 152.0 times estimated 2023 earnings of $0.48 and 25.5 times estimated 2024 earnings of $2.84 per share. The stock’s 52-week range is $3.00 to $7.13. The company does not pay a dividend. Total shareholder return for the past year was negative 23.8%.

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