In Tuesday morning trading, the Dow had dropped 1.42%, the S&P 500 traded down 1.3% and the Nasdaq was 1.61% lower. Investors probably are waiting on the Federal Open Market Committee minutes, which will be released Wednesday afternoon, before making a decision on where they think equities will be headed in the next few months.
Before U.S. markets opened on Tuesday, Home Depot reported earnings per share (EPS) that beat the consensus estimate by a penny. The miss on revenue and lower-than-expected guidance for 2024 fiscal year EPS and revenue sank the stock. Shares traded down 5.5% Tuesday morning.
Walmart beat estimates on both the top and bottom lines, but first-quarter and full-year earnings guidance came in below consensus estimates. Shares traded up by 0.5%
Teck Resources missed on both EPS and revenue but reaffirmed its production guidance for copper and zinc. The company also announced its plan to spin off its metallurgical coal business into a new public company named Elk Valley Resources with a market cap of around $11.5 billion. Shares traded about 1% lower.
Coinbase, Palo Alto Networks and Transocean are expected to report results after U.S. markets close on Tuesday, and then Baidu, Stellantis and TJX Companies the following morning. Look for reports from Coterra Energy, eBay, Lucid and Nvidia later on Wednesday.
Here is a look at what to expect when the following three companies report results first thing Thursday morning.
Alibaba
Over the past 12 months, shares of Alibaba Group Holding Ltd. (NYSE: BABA) have lost nearly 20% of their value. After posting a 52-week low a week before the company’s annual Singles Day promotion, the stock added more than 90% to its share price, before losing 17% over the past three weeks. Because the government did not lift its zero-Covid policy until late December, any uptick in sales will not really show up until Alibaba and other Chinese giants report quarterly results in three months. Also, expect to hear more than you wanted to about these companies’ AI chatbot plans.
There are 44 analysts covering the company, and 40 of them have Buy or Strong Buy ratings. The other four rate the stock at Hold. At a recent share price of around $97.00, the upside potential based on a median price target of $145.17 is about 50%. At the high price target of $218.91, the upside potential is 126.8%.
For Alibaba’s third quarter of fiscal 2023, analysts are expecting revenue of $35.84 billion, which would be up 23.1% sequentially and 6.1% year over year. Adjusted EPS are expected to come in at $2.44, up 34.2% sequentially and down 7.9% year over year. For the full fiscal year ending in March, Alibaba is expected to report EPS of $7.72, down about 7.1%, on sales of $127.6 billion, down 5.2%.
Alibaba shares trade at about 12.6 times expected 2023 EPS, 10.8 times estimated 2024 earnings of $8.96 and 9.6 times estimated 2025 earnings of $10.09 per share. The stock’s 52-week trading range is $58.01 to $125.84. The company does not pay a dividend, and total shareholder return for the past 12 months is negative 18.28%.
Newmont
Over the past 12 months, gold prices have declined by about 3.3%. Newmont Corp. (NYSE: NEM) has seen its share price fall by about a third over the same 12-month period.
Earlier this month, Newmont made an unsolicited all-stock offer of $17 billion to acquire Australian gold miner Newcrest, an offer the Australians were quick to reject. Most observers are expecting more action in mining M&A now. Even Newmont’s main rival, Barrick Gold, whose CEO pooh-poohed acquisitions last year, may be looking for an opportunity after production fell to a 22-year low last year.
Analysts remain cautious on Newmont, with 13 of 23 brokerages a Hold rating while nine have Buy or Strong Buy ratings. At a share price of around $44.80, the upside potential based on a median price target of $57.68 is 28.8%. At the high price target of $70.00, the upside potential is 56.3%.
Fourth-quarter revenue is forecast at $3.1 billion, up 17.6% sequentially but down 8.6% year over year. Adjusted EPS are forecast at $0.45, up 65.8% sequentially but 42.3% lower year over year. For the full 2022 fiscal year, estimates call for EPS of $1.86, down 37.2%, on sales of $11.8 billion, down 3.4%.
Newmont stock trades at 24.2 times expected 2022 earnings, 20.4 times estimated 2023 earnings of $2.20 and 17.3 times estimated 2024 earnings of $2.61 per share. The stock’s 52-week range is $37.45 to $86.37. Newmont pays an annual dividend of $2.20 (yield of 4.84%). Total shareholder return for the past year was negative 30.72%.
Nikola
Over the past 12 months, electric and hydrogen-powered truck maker Nikola Corp. (NASDAQ: NKLA) has seen its share price tumble by almost 70%. The company set an all-time low in mid-December for its two-and-a-half-year public life. Its prospects might be brightening, however. The California State Teachers’ Retirement System, which manages more than $311 billion in assets, raised its holding in Nikola by 57,456 shares to 412,293 shares during the fourth quarter. Nikola also has said it plans to build a hydrogen refueling network to support its fuel cell-powered trucks.
Just seven analysts cover the stock, and five of those have Hold ratings. The other two rate the stock a Buy. At a share price of around $2.40, the upside potential based on a median price target of $5.00 is 108.3%. At the high price target of $10.00, the implied gain is 317%. Note that about 30% of Nikola’s outstanding stock (about 43% of the float) is owned by institutions. The average daily trading volume in the shares is around 12 million.
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