At Thursday’s opening bell, stocks traded lower. In the first few minutes of trading, the Nasdaq was down by about 1%, the S&P 500 by about 0.9% and the Dow Jones industrials 0.84% lower.
New claims for unemployment benefits came in at 204,000, below last week’s total of 223,000 and below the consensus estimate for 225,000 new claims. Share prices tumbled following the report.
Before markets opened, Walgreens quarterly results beat estimates on both the top and bottom lines. A year-over-year revenue decline of 1.5% set the tone, however, sending the shares down more than 6% in early trading Thursday.
Constellation Brands missed the consensus adjusted earnings per share (EPS) estimate but beat on revenue. The company sees a fiscal 2023 increase of 9% to 10% in beer sales and a drop of up to 2% in wine sales. Constellation raised its free cash flow projection to $1.5 billion to $1.6 billion. Shares traded down more than 5%.
Conagra shares traded up more than 4% after the packaged foods giant beat both EPS and revenue estimates and raised profit guidance.
Schnitzer Steel beat the consensus EPS estimate but missed on revenue. Sales fell nearly 25% year over year. Shares traded down about 1% in the premarket, likely due to lowered expectations after a warning from the company early last month.
Here is a preview of what to expect when these two companies report quarterly results before markets open on Monday.
Commercial Metals
Recycler and metals fabricator Commercial Metals Co. (NYSE: CMC) stock has added about 30% to its share price over the past 12 months. Over the past six months, shares are up almost 45%, while rebar steel prices are down by around 12% in the same period. The stock posted its 52-week high in the first week of December. While rebar supply remains tight, there is the possibility that as supply ramps up, it will outrun demand. Diversifying its products would go a long way to brightening CMC’s prospects.
Just eight analysts cover Commercial Metals stock, and five have a Hold rating. The other three rate the shares at Buy or Strong Buy. At a recent price of around $49.00 a share, the stock trades right at its median price target. At the high price target of $55.00, the upside potential is 12.2%.
For the company’s first quarter of fiscal 2023 that ended in November, analysts are expecting revenue of $2.2 billion. That would be down 8.4% sequentially but up 1.0% year over year. Adjusted EPS are forecast at $1.96, down 20.2% sequentially and 21.0% higher year over year. For the full fiscal year ending in August, CMC is forecast to report EPS of $6.30, down 23.1%, on sales of $8.27 billion, down 7.2%.
Shares trade at 7.8 times expected 2023 EPS, 10.2 times estimated 2024 earnings of $4.79 and 13.4 times estimated 2025 earnings of $3.65 per share. The stock’s 52-week trading range is $31.47 to $50.83. CMC pays a forward dividend of $0.64 (yield of 1.33%). Total shareholder return for the past year was 32.2%.
Tilray
Shares of cannabis grower Tilray Inc. (NASDAQ: TLRY) have dropped by about 58% over the past year. The weak showing is virtually entirely due to lack of any movement by the United States toward removing marijuana from the list of dangerous drugs or enabling U.S. banks to offer normal banking services to companies in the cannabis business. If the Republican-controlled House ever gets its act together, prospects for a change in U.S. rules grow even dimmer. Tilray has broadened its product offerings to include spirits, and that has helped it maintain its position as the cannabis business’ market cap leader.
Of 20 analysts covering the stock, 14 have a Hold rating and four have Buy ratings. At a share price of around $3.00, the upside potential to the median price target of $3.95 is 31.7%. At the high price target of $12.00, the upside potential is 300%.
24/7 Wall St.For Tilray’s second quarter of fiscal 2023, analysts are looking for revenue of $157.78 million, up 3.0% sequentially and by 1.7% year over year. Analysts expect the company to post a loss per share of $0.05, better than the prior quarter’s loss of $0.08, but worse than last year’s break-even quarter. For the full fiscal year ending in May, analysts forecast a loss per share of $0.23, compared to last year’s loss per share of $0.31. Full-year sales are expected to rise by 3.4% to $649.91 million.
Tilray is not expected to post a profit in 2023, 2024 or 2025. The company’s sales to enterprise value multiple is 3.1 in 2023, 2.7 in 2024 and 2.2 in 2025. The stock’s 52-week range is $2.52 to $9.08. Tilray does not pay a dividend, and the total return to shareholders last year was negative 58.4%.
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