Earnings to Watch Next Week: Toll Brothers, AutoZone, Campbell, Adobe and Costco Wholesale in Focus

Earnings Calendar For The Week Of December 7

Monday (December 7)

IN THE SPOTLIGHT: TOLL BROTHERS

Toll Brothers, a home construction company based in Fort Washington, is expected to report a profit of $1.23 in the fourth quarter, up from prior $0.90, with new orders growth of more than 60%  as the company benefits from rising housing demand due to record low mortgage rates. Toll Brothers’ shares closed 1.25% higher at $47.9 on Friday; the stock is up over 20% so far this year.

“Our 4Q EPS estimate goes to $1.25. Our FY21 EPS estimate goes to $4.42 given what we expect will be a very large backlog ($6.6 billion, +26% y/y) heading into the new year. As a higher-end builder constructing largely build-to-order product, we do expect closing timing and costs to construct to have somewhat less visibility than peers despite the long backlog. This means guidance will likely be more important to share price performance post-EPS release than 4Q data. As a result of our higher estimates, our target goes to $40 from $36, but for now, we still see relative underperformance for the shares in the intermediate term,” said Carl E. Reichard, equity analyst at BTIG Group.

“While Toll Brothers (TOL) is benefiting from the ‘rising tide’ of housing demand, we believe entry-level, spec-focused builders will produce better growth, margins and returns in an environment where valuation gaps have not led to differentiated stock performance. Although shares are less expensive on a relative basis (1.3x TBV vs 1.8x for the group), and TOL has been moving to smaller homes and more optioned lots to improve turns and returns, we are looking for additional evidence that the company’s strategy for structural (not just cyclical) improvement in turns and/or margins is bearing fruit, such as improved backlog-to-close cycle time (running over 300 days currently) and inventory turns nearer to the group average of 1.0x (currently running below 0.7x.).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 7

Ticker Company EPS Forecast
JKS JinkoSolar Holding Co. Ltd. ADR $0.85
CASY Casey’s General Stores $2.80
HQY Healthequity Inc $0.36
SMAR Smartsheet Inc. -$0.21
SUMO Sumo -$0.24
EC Ecopetrol $0.15
GCTAY Siemens Gamesa ADR $0.01

Tuesday (December 8)

IN THE SPOTLIGHT: AUTOZONE

AutoZone, the largest retailer of aftermarket automotive parts and accessories in the United States, is expected to report a profit of $17.56 in the first quarter ended Saturday, November 21, 2020. AutoZone’s shares closed 0.75% higher at $1162.63 on Friday. However, the stock is down 2.5% so far this year.

“AutoZone (AZO) is our top pick in DIY Auto. We see it as a high-quality retailer with the ability to compound earnings/FCF growth over time. While not immune to a tougher macro backdrop (fewer miles driven), we believe AZO is best positioned through any recession given its leading exposure to the more defensive DIY segment (80% of sales),” equity analysts at Zacks Research noted.

“In addition, its DIFM growth was accelerating pre-COVID-19 and we think it can gain more share in that segment going forward. In our view, ongoing share gains coupled with solid expense management should allow AZO to overcome headwinds from less driving in the near- to medium-term.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 8

Ticker Company EPS Forecast
HRB H&R Block -$0.94
CMD Cantel Medical Corp $0.37
THO Thor Industries $1.58
MDB MongoDB Inc -$0.45
GWRE Guidewire Software -$0.05
AVAV AeroVironment $0.31
JRONY Jeronimo Martins $0.45
HOCPY Hoya Corp $0.74

Wednesday (December 9)

IN THE SPOTLIGHT: CAMPBELL SOUP

Campbell Soup, a US-centric packaged food company, is expected to report a profit of $0.91 in the first quarter of fiscal year 2021, up from previous $0.63. The one of the world’s top soup maker has set its Q1 2021 pre-market guidance at $0.88-$0.92 EPS. Campbell’s shares closed 0.49% lower at $48.5 on Friday; the stock is down about 2% so far this year.

“High exposure to secularly challenged soup category: Shelf-stable soup (26.5% of sales) faces headwinds given shifts in preferences toward better-for-you and fresh foods, competition from private label, and pricing pressure. Snacking brands are well-positioned, but face competitive pressures: Milano, Goldfish, Farmhouse, and Snyder’s-Lance have strong brand equity, but face high competition from PEP and MDLZ,” said Pamela Kaufman, equity analyst at Morgan Stanley.

Significant organizational changes over last two years refocused the company and show promise: Divesting non-core businesses and new leadership refreshes the company’s strategic plan, allowing the company to focus on its key segments and geographies,” Kaufman added.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 9

Ticker Company EPS Forecast
VRNT Verint Systems $0.80
RH Restoration Hardware $5.23
GEF Greif $0.70
AUOTY AU Optronics $0.09

Thursday (December 10)

IN THE SPOTLIGHT: ADOBE

Adobe, one of the largest software companies, is expected to report a profit of $2.67 in the fourth quarter, up from the previous $2.57. The company has set its Q4 2020 after-hours guidance at 2.64-2.64 EPS and its Q4 guidance at $2.64 EPS.

“Adobe (ADBE) has leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most,” said Keith Weiss, equity analyst at Morgan Stanley.

“With a large recurring rev base and operating margin improvements expected (as margin pressure from recent acquisitions comes to an end), we expect 23% EBIT CAGR from FY19-FY21 and believe this durable growth is not fully reflected in shares. Our $560 price target is based on 49x CY21e EPS of $11.50, which implies 2.3x PEG on 21% EPS CAGR from FY19-FY21e,” Weiss added.

IN THE SPOTLIGHT: COSTCO WHOLESALE

Costco Wholesale, the largest wholesale club operator in the U.S., is expected to report a profit of $2.02 in the first quarter of the fiscal year 2021, down from the previous $3.51. D.A. Davidson equity analyst M. Baker forecasts the retailer will report earnings per share of $1.93 for the quarter, up from their previous forecast of $1.92.

“FQ1 comps bested our above-cons. est. (as reported on 12/2) with earnings set for 12/10. All-in, Q1 comps accel’d Q/Q, but November slowed, we believe primarily due to hardlines -10 pts and ticket -220 bps. However, largely cont’d strength through the qtr, notably in Fresh and Softlines, should be a positive read for core-on-core GM% and EPS. While go-fwd comps likely moderate on vaccine/normalcy, we see robust growth and share gain opptys L-T. Reiterate Buy,” noted Stephanie Wissink, equity analyst at Jefferies.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 10

Ticker Company EPS Forecast
CIEN Ciena $0.63
AVGO Avago Technologies $6.24
MTN Vail Resorts -$3.60
LULU Lululemon Athletica $0.86
ORCL Oracle $1.00
SMDS Ds Smith £17.80
ASEKY Aisin Seiki Co $0.42
RLAY Relay Therapeutics Inc. -$0.32
FIZZ National Beverage $0.90

Friday (December 11)

No major earnings scheduled for release.

Couch Shoppers Expected to Make Cyber Monday Best Digital Shopping Day Ever

U.S. retailers opened their doors to Black Friday shoppers by offering steep discounts, but that didn’t help their sales numbers with social distancing practices and other measures put in place to mitigate infection risks likely driving down traffic. The good news is e-commerce sales reached a new record.

Black Friday Shopping in Stores Craters 52%

CNBC reported over the weekend that traffic at stores on Black Friday fell by 52.1% compared with last year, as Americans by and large eschewed heading to malls and queuing up in lines for shopping online, according to preliminary data from Sensormatic Solutions.

For the six key weeks of the holiday season this year, traffic in retail stores is expected to be down 22% to 25% year over year, an earlier forecast by Sensormatic Solutions said.

“We knew Black Friday [traffic] was going to be down, we just didn’t know how much it was going to be down,” said Brian Field, a senior director of global retail consulting at Sensormatic Solutions. “Shoppers are spreading out their shopping throughout the holiday season because of concerns about social distancing and the pandemic.”

Many malls looked bleak, and parking lots were more empty than full, across much of the country during the early hours of the morning Friday. Some reported traffic picking up later in the day, especially at outlet and open-air shopping centers, as some consumers felt more comfortable heading out. The warmer weather that blanketed much of the country also helped.

“Black Friday this year, from a traffic impact perspective, looked a lot like a typical Saturday after a Black Friday,” Field said.

Black Friday 2020 Online Shopping Surges 22% to Record $9 Billion – Adobe Analytics

Spending online on Black Friday this year surged nearly 22% to hit a new record, according to data from Adobe Analytics, as the Covid pandemic pushed more people to shop from the sofa and avoid crowded stores and malls.

Consumers spent $9 billion on the web the day after Thanksgiving, up 21.6% year over year, according to Adobe, which analyzes website transactions from 80 of the top 100 U.S. online retailers.

On Black Friday, Adobe found consumers spent $6.3 million per minute online, or $27.50 per person, on average. Spending on smartphones surged 25.3% year over year to reach $3.6 billion, representing 40% of total e-commerce spending.

This makes Black Friday 2020 the second-largest online spending day in history in the United States, behind Cyber Monday last year.

Retail Stock Investors Looking Forward to Cyber Monday

Despite the slow traffic at the malls on Friday, traditional brick and mortar stores may have been saved by robust online buying and curbside pickups. However, the most popular online sellers like Amazon and Etsy should continue to outperform on Cyber Monday.

According to Adobe Analytics, Cyber Monday (November 30) this year is slated to become the largest digital sales day ever, with spending reaching between $10.8 billion and $12.7 billion, which would represent growth of 15% to 35% from a year earlier.

For a look at all of today’s economic events, check out our economic calendar.