Earnings Previews: Bed Bath & Beyond, General Mills, Paychex, Schnitzer Steel
The three major U.S. equity indexes closed higher Friday, with the Nasdaq adding 3.34%, the S&P 500 rising by 3.06% and the Dow Jones industrials closing up 2.68%. All 11 sectors ended higher, led by materials (up 4%) and communications services and consumer discretionary (both up 3.8%). Energy stocks (up 1.3%) posted the smallest daily gain Friday. Trading in Monday morning’s premarket was slightly higher.
The big macroeconomic news this week comes on Thursday when the Federal Reserve’s favorite inflation index, the Personal Consumption Expenditure price index for May is announced. Economists are expecting a sharp month-over-month increase, both in the nominal and core indexes.
After markets close Monday afternoon, Nike and Trip.com are scheduled to report quarterly results.
Here is a look at four companies scheduled to release quarterly results early Wednesday.
Bed Bath & Beyond
Shares of specialty retailer Bed Bath & Beyond Inc. (NASDAQ: BBBY) have dropped more than 76% over the past 12 months and posted a new 52-week low earlier Monday month. Since March 29, the shares are down 74%, thanks in part to a weak fourth-quarter report in April that came with a warning that more bad news would be coming in subsequent quarters.
BofA analysts who visited some company stores recently noted that store hours are being cut and the air conditioning is being turned down. Is this a play to remain independent or a ploy to attract a private equity buyer? Short interest in Bed Bath & Beyond stock is 31.4%, according to Fintel data.
Analysts remain bearish on the stock. Of 20 brokerages covering the firm, nine have Sell or Strong Sell ratings while eight rate the stock at Hold. At a recent share price of around $7.00, the shares trade at their median price target. At the high price target of $17.40, the upside potential is 150%.
Bed Bath & Beyond is expected to post fiscal first-quarter revenue of $1.51 billion, which would be down 26.4% sequentially and by 22.6% year over year. Analysts are expecting a loss per share of $1.38, compared with a per-share loss of $0.92 in the prior quarter and earnings per share (EPS) of $0.05 in the year-ago quarter. For the full 2023 fiscal year ending in February, current estimates call for a loss per share of $2.72, compared to a loss per share of $1.08 last year. Revenue is expected to fall by 8.8% to $7.18 billion for the fiscal year.
The stock trades at 13.9 times estimated 2025 earnings of $0.50 per share. Bed Bath & Beyond is not expected to post a profit in 2023 or 2024. The stock’s 52-week range is $5.95 to $39.30, and the company does not pay a dividend. Total shareholder return over the past 12 months was negative 76.9%.
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Shares of food products giant General Mills Inc. (NYSE: GIS) have added more than 23% over the past 12 months, including a drop of 10% between mid-January and early March. The pandemic with its stay-at-home directives was a positive for the company, and rising inflation has moved the needle higher over the past couple of months. At a conference two weeks ago, the CEO said the company will continue to target growth of 2% to 3%, regardless of economic conditions, and raising prices to offset cost increases also remains an option.
Sentiment on the stock is muted. Of 20 analysts covering the shares, 12 have a Hold rating and only four rate the stock at Buy or Strong Buy. The stock trades at around $70.60, above the median price target of $68.00. At the high target of $82.00, the implied upside is 16.1%
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