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Earnings Previews: Accenture, Darden Restaurants, General Mills

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In the mid-morning trading on Tuesday, the Dow Jones industrials were up 0.64%, the S&P 500 up 0.71% and the Nasdaq up 0.61%.

Before U.S. markets opened on Tuesday, Tencent Music reported that it beat earnings per share (EPS) and revenue estimates in its fourth quarter. The beats were narrow, however, and the company’s outlook emphasized its “repositioning,” a word that investors interpret to mean spending now with the expectation of more revenue and profit in the future. Shares traded down about 8.5% early Tuesday.

After U.S. markets close Tuesday, Array Technologies, GameStop and Nike are set to report quarterly results. Look for Chewy and KB Home to post their results late Wednesday.

Here is a preview of what to expect when the following three companies report results first thing Thursday morning.

Accenture

Management and technology consulting giant Accenture PLC (NYSE: ACN) has suffered a share price decline of 22% over the past 12 months. From a peak in early April of last year, the stock has shed more than 25%. A consulting and tech services company would be nowhere today without an AI component, and Accenture closed that hole Tuesday morning. The company announced that it has acquired Bangalore, India-based industrial AI firm Flutura. Terms of the deal were not revealed.

Of 25 brokerages covering the stock, 15 have a Buy or Strong Buy rating and eight more rate Accenture at Hold. At a recent trading price of about $252.60, the upside potential based on a median price target of $301.25 is 24.1%. At the high target of $360.00, the potential upside is about 42.5%.

Analysts are expecting fiscal second-quarter revenue of $15.75 billion, which would be down 1.0% sequentially but up 5.2% year over year. Adjusted EPS for the quarter are forecast at $2.50, down 18.9% sequentially and by 1.6% year over year. For the full 2023 fiscal year ending in August, analysts anticipate EPS of $11.46, up 5.9%, on revenue of $64.2 billion, up 4.2%.

Accenture shares trade at 22.0 times expected 2023 EPS, 20.2 times estimated 2024 earnings of $12.50 and 18.4 times estimated 2025 earnings of $13.71 per share. The stock’s 52-week trading range is $242.80 to $345.3. The company pays an annual dividend of $4.48 (yield of 1.77%). Total shareholder return for the past 12 months was negative 20.86%.

Darden Restaurants

Darden Restaurants Inc. (NYSE: DRI), the owner and operator of more than 1,800 restaurant locations, including Olive Garden and  Longhorn Steakhouse, has added nearly 13% to its share price over the past 12 months. In the past six months, shares have added 13.5%.
According to a new report by Revenue Management Solutions, the cost of eating at home has risen by 13.5% year over year while dining-out prices have only increased by 8.0%. In its February report on retail sales, the Census Bureau’s adjusted total for food and drinking establishments was down about 2% month over month, and up 15% year over year.

Of 31 analysts covering the stock, 20 have a Buy or Strong Buy rating and another 10 rate it at Hold. At a share price of around $152.00, the implied upside to a median price target of $157.00 is 3.3%. At the high price target of $175.00, the upside potential is 15.1%.

Third-quarter revenue is forecast at $2.73 billion, up 9.7% sequentially and 11.4% higher year over year. Adjusted EPS are forecast at $2.24, up 47.5% sequentially and by 16.1% year over year. For the full 2023 fiscal year that ends in May, current estimates call for EPS of $7.88, up 6.7%, on sales of $10.42 billion, up 8.2%.

Darden stock trades at 19.3 times expected 2023 EPS, 17.4 times estimated 2024 earnings of $8.72 and 15.8 times estimated 2025 earnings of $9.61 per share. The stock’s 52-week range is $110.96 to $152.08. Darden pays an annual dividend of $4.84 (yield of 3.21%). Total shareholder return for the past year was 17.5%.

General Mills

Shares of food products giant General Mills Inc. (NYSE: GIS) have added more than 29% over the past 12 months. The consumer staples sector lost 1.6% of its value in the same period.

A month ago, the company raised its guidance for organic net sales for the 2023 fiscal year that ends in May and boosted its EPS guidance from a 4% to a 6% increase to an expected increase in the range of 7% to 8%. General Mills has been able to raise its prices to keep up with inflation and that has helped keep its profits and margins solid. The company also has received a better-than-expected boost from its 2018 acquisition of Blue Buffalo pet food. In its 2022 fiscal year, Blue Buffalo’s compound annual revenue growth rate is 15%.

Despite its strong performance, sentiment on the stock remains muted. Of 20 analysts covering the shares, 13 have Hold ratings and only three rate them at Buy or Strong Buy. The stock trades at around $80.30, implying upside potential of 2.1% based on the median price target of $82.00. At the high target of $95.00, the implied upside is 18.3%.


Fiscal third-quarter revenue is forecast at $4.97 billion, down 4.8% sequentially but up 9.5% year over year. Adjusted EPS are forecast at $0.92, down 16.1% sequentially and 9.5% higher year over year. The current estimates for the 2023 fiscal year ending in May call for EPS of $4.18, up 6.2%, on sales of $20 billion, up about 5.3%.

General Mills stock trades at 19.2 times expected 2023 EPS, 18.3 times estimated 2024 earnings of $4.40 and 17.2 times estimated 2025 earnings of $4.66 per share. The stock’s 52-week range is $61.85 to $88.34. General Mills pays an annual dividend of $2.16 (yield of 2.71%). Total shareholder return for the past year was 32.28%.

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