Image Source: Pexels

Earnings Calendar: Feb 27 – March 3

We are approaching the end of earnings season in the US. We have seen average earnings drop for the first time in over two years and the outlook remains challenging. This week, US retailers will remain under the spotlight with Target, Lowe’s, Kroger, Burlington Stores, Costco, Kohl’s, Macy’s, Best Buy, Ross Stores, and Dollar Tree all scheduled to report results.

Tech and software will also be in play with updates due out from CRM giant Salesforce, management software outfit Workday, semiconductor company Broadcom, search and data tool Splunk, computer firm HP, communication platform Zoom Video and cybersecurity firms Zscaler and Okta.

US electric vehicle stocks Rivian and Fisker will also be reporting, with larger Chinese rivals NIO and Li Auto also pencilled-in. Sticking to Asia, Chinese video-sharing platform Bilibili and South Korean e-commerce giant Coupang also feature in the calendar.

The UK calendar remains busy. We will have results out from online grocer Ocado, broadcaster ITV, food delivery platform Just Eat Takeaway, luxury carmaker Aston Martin, gambling giant Flutter Entertainment, consumer goods maker Reckitt Benckiser, distributor Bunzl, DIY retailer Travis Perkins and housebuilder Persimmon.

Target (TGT)

Target is set to continue underperforming compared to its larger rival Walmart when it releases results for the fourth quarter that covers the busy holiday shopping season. Comparable sales are forecast to decline 1.7% in the fourth quarter and revenue is expected to dip 0.6% to $30.4 billion as it comes up against tough comparatives from the year before. Adjusted EPS is expected to plunge 54% to $1.48 as rising costs and a shift in shopping habits away from higher-margin discretionary goods bite. Investors will hope Target continued to work through its inventory problems. The outlook will be key as rivals, including Walmart, have said they are cautious about the year ahead. ‘There’s just a lot that we don’t know,’ said Walmart CEO Doug McMillon this week. ‘We could tilt into a recession. We don’t know what happens to consumer spending. We don’t know what happens to lay offs, household income. And so, given that we’re so early into the year and there’s a lot of unknowns right now, we’re simply taking a cautious outlook’. Target, which has underperformed versus its larger rival over the last year, has a chance to strike a more optimistic tone, with some data suggesting Target has seen traffic outpace its rivals in recent quarters.

Costco (COST)

Costco has outperformed its retail rivals in recent quarters, delivering faster sales growth thanks to its better handling with its inventory and continuing to expand its bottom-line despite the inflationary environment. Still, there are signs things are slowing down. Early sales reports suggest we will see a slight deceleration in adjusted comparable sales growth to 6.2% in the second quarter of its financial year. That will be partly thanks to tougher comparatives versus what we saw in the previous quarter, but analysts believe the brakes will come down further going forward. Adjusted EPS is forecast to rise 9.8% from last year to $3.21. Despite the outperformance, Costco shares have underperformed the likes of Walmart over the past year because it boasts a loftier valuation than most retailers at present.

Salesforce (CRM)

All eyes are on the lookout for more signs of a slowdown when Salesforce reports this week as businesses become more stringent with spending. Revenue is forecast to rise 9.2% to $7.99 billion in the fourth quarter, marking the fifth consecutive period of slower growth. Adjusted EPS is expected to jump over 62% from last year to $1.37, representing a second consecutive quarter of growth as it gets a better grip on costs to counter the slowdown. That should continue after Salesforce announced it was cutting 8,000 jobs, representing about 10% of its workforce, in early 2023. Co-CEO Bret Taylor is stepping down, so we could see Marc Benioff, who will now lead the company as sole CEO, outline his view on how to revitalise growth in a tough environment or, failing that, more plans to reduce expenses. That may make the margin outlook for 2023 better than the sales guidance, and we could see Salesforce launch new buybacks this year to sweeten investors.

Rivian (RIVN)

We already know that Rivian produced 24,337 vehicles in 2022 and delivered 20,332 of them to customers. The focus will be on how much it can progress its ramp-up in 2023, with its rival Lucid Group falling far short of expectations on this front when it reported this week. Wall Street has very high expectations – forecasting Rivian can produce over 64,000 vehicles and sell over 57,000 of them in 2023. The lag between output and deliveries suggests logistical issues could continue to be a problem but that may also fuel demand concerns. The concern for electric vehicle makers, which are mostly unprofitable, is that they will continue to burn through cash and find it difficult to escape the red as demand softens and a price war erupts. Still, it has a healthy backlog of orders to work through. Rivian has a large sum in the bank, but it is also burning through significant amounts of cash.

NIO (NIO)

Chinese electric vehicle maker NIO delivered 122,486 vehicles in 2022. It warned in late December that it was facing ‘challenges’ with production and deliveries and that Covid-19 induced supply chain disruption was persisting, and investors will hope these are starting to ease now that the economy is reopening and putting the virus behind it. That will dictate how the ramp-up advances this year. Like Rivian, expectations are high – analysts think NIO can sell over 245,000 vehicles in 2023. Volume growth is being driven by new models. The focus on the premium end of the market should shelter it from any drop-off in demand following the end of Chinese subsidies. The consensus is looking for a 75% rise in revenue in the fourth quarter to RMB17.3 billion and its adjusted loss per share is expected to swell to RMB1.90.

ITV (ITVPY)

There have been rumours swirling that ITV could be broken up amid reports that there could be a deal in play for ITV Studios, which produces content for its channels and other broadcasters. ITV has said it is not interested in selling the unit altogether but there have been suggestions it could offload a stake to raise funds that could help fuel its ambition to grow its streaming business. That comes at a time when ITV Studios is driving growth as the advertising market stalls. That will ultimately lead to external revenue rising 4.5% in 2022 to £3.6 billion, according to consensus. Pretax profit is expected to increase 9.7% to £526.6 million as ITV continues to shrug off inflation. It has said it could take more ‘mitigation measures’ if it needs to. The company launched ITVX, its new free ad-funded streaming service, in early December and the service is attracting new users. Investors are hoping there will be more good news in the update this week.

Ocado Group (OCDGF)

Ocado is forecast to report a 2.5% rise in annual sales to £2.56 billion in 2022. Ocado has said it should breakeven at the adjusted Ebitda level in 2022 but markets have doubts and think it will sink to a loss of £59.2 million, turning from the £61 million profit seen in 2021 and marking the first slip into the red in years. Ocado is also expected to report its largest full year pretax loss on record of over £400 million. Its grocery joint venture with Marks & Spencer Group has grown some 40% since the start of the pandemic but has seen its expansion slow, whilst profitability is also hurting thanks to inflation and the need to invest in its tech-led business. Ocado is focusing on offering ‘unbeatable choice and reassuringly good value’ to help customers with the cost-of-living crisis this year, warning this will cause adjusted Ebitda losses in the first half with profits in the second. The other half of Ocado, which sees it rollout its automation technology to other companies, kept growing in 2022, capped off with a deal in November with South Korean giant Lotte Group.

Just Eat Takeaway (JTKWY)

Just Eat Takeaway gave itself a pat on the back when it released a trading update in January, stating it had delivered after turning adjusted Ebitda losses in the first half into healthy profits in the second. The online food delivery platform, which has seen growth slow since booming during the pandemic, has sharpened its focus on costs and is now more attentive to profitability. Order numbers were down 9% in 2022 but the value of those orders remained flat thanks to higher inflation-driven prices. Markets hope both metrics can return to growth in 2023 as it comes up against easier comparatives. We know adjusted Ebitda came in around EUR16 million and analysts think this can rise to over EUR200 million in 2023. That shows markets have doubts over the outlook considering Just Eat is targeting EUR225 million. That means a reaffirmation of this goal could be bullish for the stock.

Flutter Entertainment (PDYPY)

Flutter Entertainment has been in the headlines recently as it considers listing on a US stock exchange as the country becomes a bigger part of its strategy. Deregulation is fuelling a race across the US and Flutter, which owns FanDuel, is trying to lead. FanDuel has become the largest part of the business and is working to become profitable in 2023. With this in mind, Flutter is keen to open up to more American investors. Flutter has been previously under pressure to spin-off fast-growing FanDuel after its valuation was being dragged down by its more challenging business in the UK where physical bookmakers have struggled amid the transition to online gambling. The UK arm is also under threat from the Gambling Act White Paper that is in the pipeline. Turning to the results, an update from its rival Entain suggests there was a notable uptick in demand during the World Cup in November and December. However, all the attention will remain on the US. Analysts forecast Flutter will report a 25% jump in annual revenue to £7.56 billion and a pretax profit of £584.4 million, turning from the losses we saw in 2021.

Aston Martin (ARGGY)

Aston Martin has had a rough ride in 2022, having gone through a rights issue and forced to issue a profit warning not too long ago. The luxury carmaker is forecast to have made 6,265 wholesale deliveries in 2022, up just 1.4% from what we saw the year before. Aston Martin has suffered from logistical problems like other automakers and supply chain disruption has not helped, forcing it to scale back ambitions for the year. Revenue is expected to jump 23% to £1.35 billion in 2022 and its adjusted loss before tax is expected to swell to £522 million, over double the size of the losses we saw in 2021. Markets anticipate a much larger lift in deliveries to over 7,350 in 2023, which should fuel revenue growth and allow losses to narrow. There is still some way to go before deliveries hit its 10,000 target, which underpins its ambition to deliver £2 billion in annual sales and £500 million in adjusted Ebitda before 2025.

More By This Author:

Alibaba Q3 Earnings Preview: Where Next For BABA Stock?
NVIDIA Q4 Earnings Preview: Where Next For NVDA Stock?
Rolls Royce 2022 Earnings Preview: Where Next For The Rolls Royce Share Price?