Investing

Earnings Previews: EVgo, Manchester United

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In Tuesday morning trading, the Dow Jones industrials were up 0.30%, the S&P 500 down 0.04% and the Nasdaq down 0.52%.

Before U.S. markets opened on Tuesday, Walgreens beat the consensus earnings per share (EPS) and revenue estimates and reaffirmed fiscal 2023 EPS guidance in a range of $4.45 to $4.65. The Dow component traded up 3.3% Tuesday morning.

Leonardo DRS hammered revenue and EPS estimates by 29.3% and 25.0%, respectively, in its fourth quarter. Revenue guidance for fiscal 2023 was in line with estimates, but adjusted EPS guidance was well below existing estimates. Shares traded down 0.4%.

Lululemon, Micron and Paychex are on deck to report quarterly results late Tuesday or early Wednesday.

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

EVgo

Fast-charging network operator EVgo Inc. (NASDAQ: EVGO) shares have dropped more than 53% over the past 12 months but have added almost 27% since the beginning of 2023.

A small-cap ($1.52 billion market cap) company, EVgo has had a much better 2023 than rivals Blink (down 31%) or ChargePoint (up 2%), and its charging network is the country’s largest. The company weathered Tesla’s announced intention to make its charging network available to other vehicles better than either of its rivals, but it might consider aiming for positive operational cash flow instead of faster growth.

The federal dollars aimed at building out an EV infrastructure poured $615 million into state plans in 2022 and will spend an estimated $615 million this year out of a program total of $5 billion.

Of 12 brokerages following EVgo, six have a Buy or Strong Buy rating and five have a Hold rating. Shares trade at around $5.70, implying an upside of about 58% based on an average price target of $9.00. At the high target of $17.00, upside potential rises to nearly 200%.

For the company’s fourth quarter of fiscal 2022, analysts expect revenue of $20.16 million, which would be up almost 92% sequentially and about 183% year over year. Analysts are expecting EVgo to post a loss per share of $0.19, down from EPS of $0.11 in the prior quarter and EPS of $0.16 in the year-ago quarter. For the 2022 fiscal year, the loss per share is expected to be $0.39, worse than the $0.37 loss posted in 2021. Revenue is estimated to come in at $48.23 million, up 117.1%.

EVgo is not expected to post a profit in 2024 or 2025. The company’s enterprise value to sales multiple for 2022, 2023 and 2024 is 35.2, 11.5 and 6.0, respectively. The stock’s 52-week trading range is $3.64 to $14.23, and EVgo does not pay a dividend. Total shareholder return for the past year was negative 53.5%.

Manchester United

English Premier League football (soccer) club Manchester United PLC (NYSE: MANU) has posted a share price gain of 56.6% over the past 12 months. Since announcing in November that it would accept bids from potential buyers, the shares are up more than 70%.

Over the past weekend, three bidders submitted final offers for the club. None, apparently, meets the current owner’s (the Glazer family) desired minimum of £6 billion (about $7.4 billion). And there is reported dissension in the Glazer family ranks about the desirability of selling the club at all. That dissension caused the stock to drop nearly 7% on Monday.

Only four analysts cover the stock, two with Buy ratings and two with Hold ratings. At a share price of around $22.30, the implied upside based on a median price target of $24.52 is 10%. At the high target of $36.61, the implied gain is about 64.2%.

Second-quarter revenue is forecast at $172.04 million, up 7.2% sequentially but down 31.4% year over year. The club is expected to post EPS of $0.03 per share, up from a loss per share of $0.07 in the prior quarter and down 50% year over year. For the full year ending in June, Manchester United is expected to post a loss per share of $0.41, well below the $0.25 loss in 2022, on revenue of $741.39 million, up 4.4% year over year.

The team is not expected to post a profit in 2023, 2024 or 2025. The enterprise value to sales multiples for 2023, 2024 and 2025 are 5.9, 5.2 and 5.0, respectively. The stock’s 52-week range is $10.41 to $27.34, and Manchester United pays an annual dividend of $0.18 per share (yield of 0.73%). Total shareholder return for the past 12 months was 57.7%.

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