Earnings Previews: Home Depot, iQIYI, Sea Limited, Tencent Music

Analysts expect Sea to report first-quarter revenue of $3.03 billion, down 12.2% sequentially but 4.5% higher year over year. EPS are pegged at $0.73, down 27.5%, and far better than the year-ago loss per share of $0.80. For the full 2023 fiscal year, EPS is forecast at $3.31, well above last year’s loss per share of $1.69, on sales of $13.47 billion, up about 8.2% year over year.

The stock trades at 25.2 times expected 2023 EPS, 25.9 times estimated 2024 earnings of $3.23 and 16.5 times estimated 2025 earnings of $5.05 per share. The stock’s 52-week range is $40.66 to $93.70. The company does not pay a dividend, and the total shareholder return for the past year was 46.27%.

Tencent Music

Tencent Music Entertainment Group Inc. (NYSE: TME), China’s largest online music entertainment platform, is a subsidiary of Tencent Holdings, the owner of WeChat and an owner of more than 18% of Sea Limited stock. Over the past year, shares of Tencent Music have jumped by nearly 95%, even after a 12% haircut so far in 2023.

Revenue slowed in the fourth quarter but not in the company’s music streaming business. The declines came in its social entertainment businesses (karaoke and live streaming), the foundations on which the company was built. Further growth in music streaming relies on converting free users to paid subscribers. In the prior quarter, paying subscriber number rose by more than 12 million to 88.5 million.

Analysts remain bullish on the stock, with 18 of 26 analysts having Buy or Strong Buy ratings, while seven others rate it at Hold. At a price of around $7.30 a share, the potential upside based on a median price target of $9.94 is about 36.2%. At the high target of $12.24, the implied upside is around 67.7%.

Analysts expect the company to post first-quarter revenue of $994.22 million, down 7.7% sequentially and by 110.5% year over year. Adjusted EPS are pegged at $0.12, down 12.5% sequentially but 33.3% higher year over year. For the full 2023 fiscal year, EPS are forecast at $0.50, up 18.2%, on revenue of $4.29 billion, up 4.3%.

The stock trades at 14.6 times expected 2023 EPS, 13.5 times estimated 2024 earnings of $0.54 and 12.1 times estimated 2025 earnings of $0.61 per share. Tencent Music’s 52-week range is $3.14 to $9.29. The company does not pay a dividend, and total shareholder return over the past 12 months was 87.53%.

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