Wall Street Week Ahead Earnings: Dick’s Sporting, Campbell Soup and Oracle in Focus

Investors have been rattled by geopolitical tensions over the Russia-Ukraine crisis, which has caused the global stock market to suffer. The S&P 500 plunged into correction territory.

If this tension continues for long, analysts fear that it will be harder for the U.S. Federal Reserve to raise rates after this month’s hike. Due to this, investors sought safe-haven assets and U.S. Treasury yields fell as tensions between Ukraine and Russia increased.

In addition, investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks amid surging inflation.

Earnings By Day

Earnings Calendar For The Week Of March 7

Monday (March 7)

TICKER COMPANY EPS FORECAST
CIEN Ciena $0.36
CLAR Clarus $0.31
EGRX Eagle Pharmaceuticals $0.41
SQSP Squarespace $-0.03
VET Vermilion Energy $0.57

 

Tuesday (March 8)

IN THE SPOTLIGHT: DICK’S SPORTING

The sporting goods retailer Dick’s Sporting Goods is expected to deliver earnings per share of $2.75 in the holiday quarter, which represents year-over-year growth of over 13% from $2.43 per share seen in the same period a year ago.

The Coraopolis Pennsylvania-based company would post revenue growth of more than 5% to $3.29 billion from $3.13 billion a year earlier. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

Dick’s Sporting Goods (DKS) is in a favourable position given its category dominance, industry tailwinds, and healthy balance sheet. Its outlook within the category is likely to be even stronger post-COVID-19. We see a positive risk/reward skew based on our view the earnings power of the business is underappreciated. Key drivers include merchandise margin expansion and capital return (buybacks). We think there is upside for the stock without underwriting a higher valuation multiple as a result,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“The stock’s multiple has not broken out like it has for other retailers in our space which should emerge stronger post-COVID-19. The potential for multiple expansion adds optionality/upside to the bull case.”

A list of other earnings reports mentionable

COMPANY EPS FORECAST
ABM ABM Industries $0.82
BMBL Bumble $-0.02
WOOF Petco Health & Wellness $0.23
VTNR Vertex Energy $0.09

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

Wednesday (March 9)

IN THE SPOTLIGHT: CAMPBELL SOUP

The Camden, New Jersey-based soups and snacks maker Campbell Soup is expected to report earnings per share of $0.78 in the fiscal second quarter, which represents a year-over-year decline of over 7% from $0.84 per share seen in the same period a year ago.

Analysts expect that easing COVID-19 curbs and consumers eating out more would affect the company’s processed food sales. Campbell’s revenue was forecast to decline nearly 3% to $2.21 billion. However, it is worth noting that the maker of canned soup has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“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,” noted 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.”

A list of other earnings reports mentionable

TICKER COMPANY EPS FORECAST
CPB Campbell Soup $0.78
EXPR Express $0.08
KFY Korn Ferry $1.48
LCUT Lifetime Brands $0.46
REVG REV Group $0.09
THO Thor Industries $2.91

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

Thursday (March 10)

IN THE SPOTLIGHT: ORACLE

The world’s largest database management company, Oracle, is expected to report earnings per share of $1.0 in the fiscal third quarter, which represents a year-over-year decline of nearly 3% from $1.03 per share seen in the same period a year ago.

The Austin, Texas-based computer technology corporation would post revenue growth of more than 4% to $10.5 billion from $10.1 billion a year earlier. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“A preliminary look at a potential Oracle + Cerner Pro-forma model suggests modest EPS accretion by CY23, assuming Oracle shifts capital allocation priorities and halts the torrid pace of buybacks. Our illustrative analysis shows leverage exiting CY23 at 3.2x, assuming a deal at 32% cash/68% debt,” noted Keith Weiss, equity analyst at Morgan Stanley.

In December, several equity analysts raised their price targets after the database management company beat earnings estimates for the fiscal second quarter and forecasts profit and revenue above expectations for the ongoing quarter.

The company expects to earn $1.19 to $1.23 per share in the fiscal third quarter, higher than the Wall Street consensus estimates of $1.16. Revenue is expected to be $10.7 billion to $10.9 billion, above expectations of $10.56 billion, Reuters reported.

Oracle’s current low valuation at ~18x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher. With management guiding to mid-single-digit CC revenue growth in a software sector filled with strong secular growth stories, and operating margins declining in FY22 due to heightened investment in Cloud, we remain Equal-weight while our price target moves up to $87,” Weiss added.

A list of other earnings reports mentionable

TICKER COMPANY EPS FORECAST
GCO Genesco $2.53
JD JD.com $0.14
LZ LegalZoom.com $-0.09
MLNK MeridianLink $-0.02
PSTL Postal Realty Trust $0.23

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

Friday (March 11)

TICKER COMPANY EPS FORECAST
BKE Buckle $1.29
GENI Genius Sports $-0.23
PLXP PLx Pharma $-0.69
SPNE SeaSpine Holdings $-0.33

 

Dick’s Sporting on Track to Beat Earnings Estimates Again

The sporting goods retailer Dick’s Sporting Goods is expected to deliver earnings per share of $2.75 in the holiday quarter, which represents year-over-year growth of over 13% from $2.43 per share seen in the same period a year ago.

The Coraopolis Pennsylvania-based company would post revenue growth of more than 5% to $3.29 billion from $3.13 billion a year earlier. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“Reasons To Buy: DICK’S Sporting’s fiscal third-quarter results gained from the solid online show and favourable customer demand. Management also raised fiscal 2021 view,” noted analysts at ZACKS Research. The company anticipates sales of $12,120-$12,190 million in the fiscal year 2021, same-store sales of 24-25% and adjusted earnings of $14.6-$14.

At the time of writing, Dick’s stock traded 2.4% lower at $109.69 on Friday. The stock fell nearly 3% so far this year after surging over 113% in 2021.

Analyst Comments

Dick’s Sporting Goods (DKS) is in a favourable position given its category dominance, industry tailwinds, and healthy balance sheet. Its outlook within the category is likely to be even stronger post-COVID-19. We see a positive risk/reward skew based on our view the earnings power of the business is underappreciated. Key drivers include merchandise margin expansion and capital return (buybacks). We think there is upside for the stock without underwriting a higher valuation multiple as a result,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“The stock’s multiple has not broken out like it has for other retailers in our space which should emerge stronger post-COVID-19. The potential for multiple expansion adds optionality/upside to the bull case.”

Dick’s Sporting Goods Stock Price Forecast

Thirteen analysts who offered stock ratings for Dick’s in the last three months forecast the average price in 12 months of $150.50 with a high forecast of $180.00 and a low forecast of $120.00.

The average price target represents a 37.08% change from the last price of $109.79. Of those 13 analysts, nine rated “Buy”, four rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $145 with a high of $230 under a bull scenario and $75 under the worst-case scenario. The investment bank gave an “Overweight” rating on the sporting goods retail company’s stock.

Several analysts have also updated their stock outlook. Cowen and company lifted the target price to $161 from $154. Citigroup lowered the price target to $161 from $170. UBS slashed the price objective to $120 from $148.

However, technical analysis suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator gives mixed signals.

Check out FX Empire’s earnings calendar

The 3 Things Investors Have to Know Today

The move eliminates a bit of uncertainty by maintaining the central bank leadership that investors are already familiar with, but it also eliminates the possibility of a more dovish Fed Governor Lael Brainard becoming the next Fed Chair.

Interest rate markets

The interest rate markets have reacted accordingly with odds of three interest rate hikes in 2022 now being the most popular bet. The 10-Year Treasury punched up beyond 1.60% and several of the bigger tech stocks took it on the chin as talks of higher interest rates circulate.

Higher interest rates have many inside the market thinking faster economic growth, where cyclical sectors like Financials tend to benefit. In other words, we might be seeing more “rotation” out of technology and into financials as we move towards year end.

There’s some buzz that tech stock valuations could see some compression if long-term interest rates increase, where as the financials would be a beneficiary. We can potentially see “tax-loss selling” .

Oil market

The oil market is also creating some rotation in capital as the U.S., China, Japan, India, and South Korea prepare for a coordinated release of supplies from strategic stockpiles. Not surprisingly, OPEC is not happy about this as the release of an estimated +35 million barrels from the U.S. alone could change the current supply-demand dynamics.

OPEC claims the release is unjustified and says it may need to reassess the amount of its monthly production increases. Some interpret this as a threat by OPEC to retaliate against global oil importers and not surprisingly is raising concerns about a global energy showdown that could send oil and other energy prices soaring even higher further out on the horizon. OPEC’s next production meeting is December 2.

Biden is expected to make an announcement in regard to the stockpile release today.

Data to watch today

In economic data, investors will be digesting preliminary reads from IHS Market for Manufacturing and Services PMI. Bulls are hoping to see more evidence that supply chain logjams are starting to clear after reports indicating that ports and shippers are starting to make some headway on the backlog along the West Coast. Data yesterday showed Existing Home Sales rose again in October, though total sales were down nearly -6% compared to last year.

At the same time, the median price for single-family homes rose +13.5% year-over-year to $360,800. It’s worth noting that at least part of the increase in the median sales price has been driven by a big jump in “luxury” home sales. By price category, sales of homes priced under $250,000 fell -24% year over year in October, while sales of homes priced between $750,000 and $1 million rose +25%, and sales of million-dollar plus homes were up +31%.

New Home Sales for October are due out on Wednesday followed by Pending Home Sales next Monday. On the earnings front, results are due today from American Eagle, Best Buy, Cracker Barrel, Dell, Dick’s Sporting Goods, Dollar Tree, The Gap, HP, JM Smucker, Medtronic, and Nordstrom. Tomorrow we have John Deere reporting earnings.

Earnings to Watch in Holiday-Shortened Week: Zoom, Medtronic, Best Buy, Dollar Tree and Deere in Focus

Earnings Calendar For The Week Of November 22

Monday (November 22)

IN THE SPOTLIGHT: ZOOM

The San Jose, California-based communications technology company Zoom is expected to report its fiscal third-quarter earnings of $1.09 per share, which represents year-over-year growth of over 10% from $0.99 per share seen in the same period a year ago.

The company, which provides video telephony and online chat services through a cloud-based peer-to-peer software platform, would post revenue growth of over 30% to $1.02 billion. Zoom will report 3Q FY22 earnings after market close on Monday, November 22.

“Investors lean cautious heading into FQ3 print given ongoing concerns around SMB churn, particularly as other WFH names have underperformed. View FQ4 print as having more favourable risk/reward, but given cautious positioning, could see outperformance if SMB churn is better than expected,” noted Meta Marshall, equity analyst at Morgan Stanley.

Zoom has established its position as the leader in video conferencing, now a growth market. The company has a meaningful competitive moat built on more than just architecture. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins are encouraging. Opportunities to expand the platform remain. Manageable churn post-COVID as a move to hybrid work setups.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 22

Ticker Company EPS Forecast
JKS JinkoSolar Holding Co. Ltd. ADR -$0.07
GRFS Grifolsbarcelona $0.29
JOBS 51job $4.45
GGAL Grupo Financiero Galicia $0.68
ZM Zoom Video Communications $1.09
A Agilent $1.18
KEYS Keysight Technologies $1.64
URBN Urban Outfitters $0.83
BMA Banco Macro $1.22
TLK Telekomunikasi Indns Tbk Prshn Pp Pt $0.46

Tuesday (November 23)

IN THE SPOTLIGHT: MEDTRONIC, BEST BUY, DOLLAR TREE

MEDTRONIC: The medical device company is expected to report its fiscal second-quarter earnings of $1.29 per share, which represents year-over-year growth of over 26% from $1.02 per share seen in the same period a year ago.

The company has beaten earnings per share (EPS) estimates all times in the last four quarters with a surprise of over 13%. The Fridley, Minnesota-based medical company would post revenue growth of nearly 4% to $7.9 billion.

Medtronic (MDT) commentary and guide should act as a barometer for MedTech recovery through the balance of ’21 and into ’22. More muted recovery through October could incrementally pressure 2FQ, with the path to 9% y/y FY22 growth looking increasingly challenging in the face of recent sector headwinds,” noted Cecilia Furlong, equity analyst at Morgan Stanley.

BEST BUY: The Richfield, Minnesota consumer electronics retailer is expected to report its fiscal third-quarter earnings of $1.93 per share, which represents a year-over-year decline of over 6% from $2.06 per share seen in the same period a year ago.

The consumer electronics retailer’s revenue would decline 2.5% to $11.56 billion down from $11.85 billion a year earlier. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“Market looking for a 4-5% comp in Q3 vs cons at -1.5%. We see upside to 2H’21 numbers and expect a raised full-year guide as demand remains strong. That said, momentum is slowing and the category could shrink in ’22/’23. The stock is +15% in the last month, and a Q3 beat and raise seems priced in,” noted Simeon Gutman, equity analyst at Morgan Stanley.

DOLLAR TREE: The Chesapeake, Virginia-based company is expected to report earnings of $0.96 per share in the third quarter, down over 30% from $1.39 per share seen in the same period a year ago. But the discount variety stores that sells items for $1 or less would post revenue growth of nearly 4% to $6.4 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 23

Ticker Company EPS Forecast
CPG Compass Group £17.93
BYG Big Yellow £19.26
MDT Medtronic $1.29
BBY Best Buy $1.93
DLTR Dollar Tree $0.96
J Jacobs Engineering Group Inc $1.57
BURL Burlington Stores $1.24
SJM J.M. Smucker $2.04
DKS Dick’s Sporting Goods $2.03
PLAN Progressive Planet -$0.11
AEO American Eagle Outfitters $0.60
ANF Abercrombie & Fitch $0.65
DY Dycom Industries $0.75
JWN Nordstrom $0.56
NOAH Noah $2.95
VMW VMware $1.54
HPQ HP $0.88
GME GameStop -$0.51
CPB Campbell Soup $0.81
GPS Gap $0.50
SVT Severn Trent £49.79

Wednesday (November 24)

IN THE SPOTLIGHT: DEERE

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal fourth-quarter earnings of $3.92 per share, which represents year-over-year growth of over 64% from $2.39 per share seen in the same period a year ago.

The agricultural, construction and forestry equipment manufacturer would post revenue growth of more than 20% to $10.5 billion. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“Despite positive secular demand fundamentals within both the Ag and Construction businesses we are lowering near-term estimates for Deere (DE) (F4Q21/F1Q22) to better reflect the impact from lost production in the US stemming from supplier bottlenecks and the labour strike,” noted Stephen Volkmann, equity analyst at Jefferies.

“We assume any lost production elongates the cycle, and we maintain our above Consensus estimates for 2023 noting additional upside from the infrastructure bill has yet to be factored into outlooks.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 24

Ticker Company EPS Forecast
UU United Utilities £25.21
JMAT Johnson Matthey £44.57
BVIC Britvic £31.37
DE Deere & Company $3.92
TCOM Trip.com Group Ltd $0.11
KC Kutcho Copper -$1.53

Thursday (November 25)

No major earnings are scheduled for release. The U.S. stock market will be closed for the Thanksgiving holiday.

Friday (November 26)

No major earnings are scheduled for release. The U.S. stock market will be closed for the Thanksgiving holiday.

Dick’s Sporting Goods Soars 13% in Impressive Run

Shares of Dick’s Sporting Goods were on fire today, rising 13% to just below USD 130 per share on stronger than usual volume of 17 million shares. The sporting goods retailer had a record second quarter for the company, beating analyst expectations on both the top and bottom lines. While the stock made its way to a fresh all-time high of USD 134, it wasn’t able to hold it for the close.

The stock has been on a tear, having risen more than 100% year-to-date even in an uncertain environment. Dick’s has been among the beneficiaries of the strengthening economy as shoppers head back to the stores, though its e-commerce business is booming too. Even throughout the pandemic, Dick’s has been ringing the cash register as consumers invest in exercise apparel and equipment.

The company has also figured out a way to improve its margins, fueled largely by its ship-from-store model that streamlines the process for the retailer and customers alike, analysts point out.

Blockbuster Results

Dick’s Q2 earnings came in at USD 5.08 per share, far above Wall Street estimates of USD 2.88. Revenue climbed higher by more than 20% year-over-year to USD 3.2 billion on analyst estimates of USD 2.8 billion. Same-store sales rose by a similarly impressive double-digit percentage.

Dick’s lifted its full-year outlook on the heels of the solid quarter, announced a special dividend, raised its regular distribution, and revealed a doubling of its share repurchase plans, all bullish for a stock that has already defied the odds.

Executive Shuffle

In recent days, Dick’s Sporting Goods named Navdeep Gupta as CFO, effective Oct. 1. Gupta is succeeding Lee Belitsky, who will remain at the retailer but in a different role. Gupta is no stranger to the company and has been employed by Dick’s since 2017. He is also an alum of Advance Auto Parts.

Gupta is not the only new addition to the C-Suite. Earlier this year, the company named Lauren Hobart as CEO, replacing Ed Stack. Together, Gupta and Hobart will have to navigate the impact that the spread of the delta variant could have on business going forward. Based on the stock’s performance, it appears they are off to a good start.

Morgan Stanley Lifts Dick’s Sporting Goods Price Target to $115

Morgan Stanley raised their stock price forecast on Dick’s Sporting Goods to $115 from $93 and said that it is driven entirely by a 30% increase in ’22 EPS estimate of $7.60.

Late last month, Dick’s said its fiscal first-quarter net income rose to $361.8 million, or $3.41 per share, from a loss of $143.4 million, or $1.71 per share, a year earlier. The company said its adjusted earnings per share (EPS) of $3.79 per share, beating the Wall Street consensus estimates of $1.12 per share.

The Coraopolis, Pennsylvania-based company said its revenue surged 119% to $2.92 billion, beating estimates for $2.18 billion. On a two-year basis, sales were up 52%.

“We are ‘Overweight’ rated. We see Dick’s Sporting Goods (DKS) as a structurally higher-margin business with faster growth post-COVID-19. This warrants a mid to high-teens multiple in our view. Raising price target to $115,” noted Simeon Gutman, equity analyst at Morgan Stanley.

Dick’s Sporting Goods shares rose over 70% so far this year.

Twenty analysts who offered stock ratings for Dick’s Sporting Goods in the last three months forecast the average price in 12 months at $103.22 with a high forecast of $142.00 and a low forecast of $78.00.

The average price target represents a 5.90% increase from the last price of $97.47. Of those 20 equity analysts, 11 rated “Buy”, eight rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $150 and the worst-case scenario forecast of $60.

Dick’s Sporting Goods (DKS) is in a favorable position given its category dominance, industry tailwinds, and healthy balance sheet. Its outlook within the category is likely to be even stronger post-COVID-19. We see a positive risk/reward skew based on our view the earnings power of the business is underappreciated. Key drivers include merchandise margin expansion and capital return (buybacks). We think there is upside for the stock without underwriting a higher valuation multiple as a result,” Morgan Stanley’s Gutman added.

“The stock’s multiple has not broken out like it has for other retailers in our space which should emerge stronger post-COVID-19. The potential for multiple expansion adds optionality/upside to the bull case.”

Other equity analysts also recently updated their stock outlook. Stephens raised the target price to $95 from $74. CFRA lifted the price target by $30 to $110. UBS upped the price target to $107 from $90.

Telsey Advisory Group increased the price target to $113 from $98. Wedbush lifted the target price to $110 from $97. Stifel lifted the target price to $98 from $71. Citigroup raised the price target to $128 from $90.

Check out FX Empire’s earnings calendar

Dick’s Sporting Goods Knocks Quarterly Earnings Out of Ballpark

DICK’S Sporting Goods, Inc. (DKS) jumped 15.68% Wednesday after the sport’s equipment and apparel retailer smashed Wall Street’s earnings and revenues forecasts on the back of surging digital sales.

The company reported second-quarter (Q2) adjusted earnings of $3.21 per share, with the figure coming in well above analysts’ expectation of $1.30 a share and increasing 155% from last year’s profit of $1.24 per share. Sales of $2.71 billion ballooned  20% from a year ago and came in 8.21% ahead of the Street expectation.

As of Aug. 27, 2020, DICK’s stock has a market capitalization of $4.82 billion, issues a 2.68% dividend yield, and is up a whopping 57% over the last three months.

Steep Hike in Online Sales

The company’s digital sales, including curbside pickup orders, grew 194% during the quarter as consumers visited the website to purchase hiking apparel, kayaks, weights, and activewear gear to stay fit during the pandemic. “During this pandemic, the importance of health and fitness has accelerated and participation in socially distant, outdoor activities has increased,” CEO Ed Stack told investors during the conference call, per CNBC. “There has also been a greater shift toward athletic and active lifestyle products with people spending more time working and exercising at home,” he added.

Wall Street View

Analysts remain mostly bullish on the stock as stay-at-home fitness trends look likely to continue into the fall. There’s also a consensus the sporting goods retail giant could gain market share, given that many of its major brick-and-mortar competitors have filed for bankruptcy. The stock receives 10 ‘Buy’ ratings, 14 ‘Hold’ ratings, and 1 ‘Sell’ rating. Price targets range from $71 to $34, with the median Street target sitting at $52. Currently, the shares trade at $53.99.

Technical Outlook and Trading Tactics

The DICK’s share price broke above key resistance at $48 on heavy volume Wednesday, indicating institutional buying interest behind the move. Furthermore, earlier this week, the moving average convergence divergence (MACD) indicator crossed above its trigger line to generate a buy signal. Additionally, a golden cross signal last month suggests further upside.

Those who play the breakout should look for a retest the all-time high (ATH) at $62.88, with a stop-loss order placed underneath yesterday’s low at $50.47. The trade offers a risk/reward ratio of around 1:2.5, assuming a fill at Wednesday’s $53.99 closing price. ($8.89 profit per share vs. $3.51 risk per share)