Investing

Earnings Previews: Applied Materials, Catalent, Deere, Foot Locker

Last month, Colorado enacted the first state law that guarantees farmers the right to repair their own tractors and equipment, a bill Deere has opposed for years. If this becomes a trend, Deere’s captive service revenue is likely to fall.

Analysts continue to be bullish on the stock, with 18 of 28 having a rating of Buy or Strong Buy, while 10 more rate it at Hold. At a share price of around $363.00, the upside potential based on a median price target of $462.00 is 27.3%. At the high price target of $591.00, the upside potential is 62.8%.

For the company’s second quarter of fiscal 2023, analysts expect Deere to report revenue of $14.87 billion, up 30.4% sequentially and up 23.6% year over year. (Deere’s January quarter is historically its weakest.) Adjusted EPS are expected to come in at $8.47, up 29.3% sequentially and by 38.8% year over year. For the full fiscal year ending in October, EPS are forecast at $30.33, up 26.5%, on sales of $54.35 billion, up 13.4%.

Deere stock trades at 12.0 times expected 2023 EPS, 11.4 times estimated 2024 earnings of $31.93 and 11.1 times estimated 2025 earnings of $32.57 per share. Its 52-week range is $283.81 to $448.40. The company pays an annual dividend of $5.00 (yield of 1.35%). Total shareholder return over the past year was negative 1.89%.

Foot Locker

When mall-store operator Foot Locker Inc. (NYSE: FL) reported January-quarter results last March, the company issued downside guidance for fiscal 2024 EPS and revenue. The stock price tumbled initially but has come back nicely to post a decline of just 0.9% after that first plunge. Analysts got the message and have lowered the EPS estimates by a third since March, while the revenue estimate jumped on the report. Share prices have moved little since then. The bar has been safely lowered, and Foot Locker had better produce a solid beat when it reports results Friday morning.

Of 20 analysts covering the company, 13 are waiting on the sidelines with a Hold rating. Six have Buy ratings. At a share price of around $39.00, the upside potential based on a median price target of $42.50 is 6.4%. At the high price target of $60.00, the upside potential is 53.8%.

First-quarter revenue is forecast at $1.99 billion, down 14.7% sequentially and by 8.7% year over year. Adjusted EPS are forecast at $0.78, down 19.6% sequentially and 51.3% lower year over year. For the full 2024 fiscal year ending next January, Foot Locker is expected to report EPS of $3.47, down 30%, on revenue of $8.35 billion, down 4.5%.

Shares trade at 11.3 times expected 2024 EPS, 9.5 times estimated 2025 earnings of $4.14 and 7.8 times estimated 2026 earnings of $5.03 per share. Foot Locker’s 52-week trading range is $23.85 to $47.22. The company pays an annual dividend of $1.60 (yield of 4.0%). Total shareholder return for the past year was 35.19%.

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