Earnings Previews: Livent, PayPal, Starbucks, Under Armour

The three major U.S. equity indexes closed higher again Friday. The Dow Jones Industrial Average added 0.97%, the Standard & Poor’s 500 rose 1.42%, and the Nasdaq Composite closed up 1.88%. Nine of 11 sectors, led by energy (up 4.3%) and consumer cyclicals (up 3.9%) closed higher while consumer staples (down 0.8%) and healthcare (down 0.3%) were the only sectors to close lower. The Dow added 3% last week, and the S&P 500 and the Nasdaq both added more than 4%. The report on non-farm payrolls for July will be released Friday. Economists currently expect payrolls to rise by 250,000, down sharply from June’s total increase of 372,000. The unemployment rate is expected to come in unchanged at 3.6%. The three major indexes are trading mixed in late morning trading Monday with the Dow and the S&P 500 down slightly and the Nasdaq composite up about 0.5%.

Before markets opened Monday morning, ON Semiconductor reported better-than-expected results on both the top and bottom lines. The chipmaker also raised third-quarter earnings and revenue guidance. On the downside, operating margins and net income dipped sequentially. The stock traded down more than 4% early Monday.

After markets close today, Activision Blizzard, Devon Energy, Diamondback Energy, and Williams will be reporting quarterly results. Before markets open Tuesday morning,  BP, Caterpillar, JetBlue, and Marathon Petroleum will release earnings reports.

We’ve already published previews for Airbnb, AMD, Coterra Energy, and Occidental Petroleum, all of which will report results after markets close Tuesday afternoon.

Here are three more companies reporting after hours on Tuesday and one set to report results before markets open Wednesday morning.

Livent

Lithium producer Livent Corp. (NYSE: LTHM) has seen its share price rise by about 26.5% over the past 12 months. Last week, the company agreed to supply battery-grade lithium to General Motors for at least six years beginning in 2025. The lithium miner already has a supply agreement with Tesla. Lithium carbonate pricing remains right around $70,000 per metric ton, just below its all-time high of $75,000 in mid-March.  At a conference of electric-vehicle battery makers last week in Shanghai, some participants said prices could reach a high of up to $88,700 by the end of the year for battery-grade lithium carbonate. The company releases its earnings report after markets close Tuesday.

Of 14 analysts covering the stock, seven have Hold ratings on the shares while another seven rate the stock as a Buy or Strong Buy. At a current price of around $24.60, the implied upside based on a median price target of $33.00 is 34.1%. At the high price target of $44.00, the implied upside is 78.9%.

Second-quarter revenue is forecast at $209.39 million, up 40.4% sequentially and an increase of 104.9% year over year. Adjusted EPS is forecast at $0.29, up 72.5% sequentially and a gain of EPS of $0.04 per share in the year-ago quarter. For the full 2022 fiscal year, EPS is forecast at $1.23, up 581%, on revenue of $801.56 million, a rise of 90.7%.

Livent stock trades at 20 times expected 2022 EPS, 15.8 times estimated 2023 earnings of $1.55, and 17.3 times estimated 2024 earnings of $1.42 per share. The stock’s 52-week range is $18.91 to $34.61. Livent does not pay a dividend. Total shareholder return for the past year was 26.5%.

PayPal

PayPal Holdings Inc. (NASDAQ: PYPL) has dropped 68% from its share price over the past 12 months. The Wall Street Journal reported last week that activist investor Elliott Management has accumulated a position in PayPal and that the activist plans to demand that PayPal increase its staff cuts and office closings. PayPal has focused on boosting transactions from the 30% of its active user base which accounts for 80% of all transactions. That reduces promotional expenses, but it will take a while to work, and Elliott is not famous for its patience. PayPal reports results after markets close Tuesday.

Of 47 analysts covering the stock, 32 rate PayPal shares as a Buy or Strong Buy and another 14 have given the stock a Hold rating. At a current price of around $88.80, the upside potential based on a median price target of $110.00 is 23.9%. At the high target of $220, the upside potential is nearly 148%.

Second-quarter revenue is expected to come in at $6.78 billion, up 4.6% sequentially and up 5.4% year over year. Adjusted EPS is forecast at $0.87, down 0.9% sequentially and down 24.3% year over year. For the full 2022 fiscal year, estimates call for EPS of $3.86, down 16.2%, on sales of $28.18 billion, up 11.1%.

PayPal stock currently trades at a multiple of 23 times expected 2022 EPS, 18.8 times estimated 2023 earnings of $4.72, and 15.5 times estimated 2024 earnings of $5.73 per share. The stock’s 52-week range is $67.58 to $296.70. PayPal does not pay a dividend and total shareholder return for the past 12 months was negative 67.85%.

Starbucks

Starbucks Corp. (NASDAQ: SBUX) posted a 52-week high in late July. Since then the shares have dropped by more than 30% with the biggest share of that coming this month. Shares were off nearly 42% in early May when the stock notched its 52-week low. The company has announced plans to close more stores citing safety issues such as crime, homelessness, and drug use in its store restrooms. Among stores to be closed are some that have voted to unionize, causing headline headaches for a company that once touted its support for its employees. The company reports results after markets close Tuesday.

Analyst sentiment is mixed on the stock with 17 of 33 putting a Hold rating on the stock and 16 assigning a Buy or Strong Buy rating. At a current price of around $85.40, the upside potential based on a median price target of $89.00 is 4.2%. At the high price target of $136.00, the upside potential is 59.3%.

For the company’s third fiscal quarter of 2022, analysts are expecting revenue of $8.13 billion, up 6.5% sequentially and up by 8.4% year over year. Adjusted EPS is pegged at $0.76, up 28.1`% sequentially and down 25% year over year. For the 2022 fiscal year, current estimates call for EPS of $2.86, down 11.8%, on sales of $32.21 billion, up 10.9%.

Starbucks stock trades at a multiple of 29.9 times expected 2022 EPS, 24.9 times estimated 2023 earnings of $3.43, and 21.6 times estimated 2024 earnings of $3.97 per share. The stock’s 52-week range is $68.39 to $122.98. Starbucks pays an annual dividend of $1.96 (yield of 2.31%). The total shareholder return for the past year was 28.2%.

Under Armour

Sports apparel and gear maker Under Armour Inc. (NYSE: UAA) has dropped about 54.5% from its share price over the past 12 months. Rival Nike’s share price has decreased by about 31.2% over the same period. The consumer discretionary sector has dropped nearly 13% in the past 12 months and is down about 19% so far in 2022. Last week, the company agreed to pay UCLA to settle a lawsuit following the company’s termination of an apparel sponsorship deal. At its current price level, investors have to decide if the shares are a bargain or a value trap. The company reports results before markets open Wednesday morning.

Sentiment on the stock is bullish with 12 of 29 analysts giving the shares a Buy or Strong Buy rating and 16 giving the stock a Hold rating. At a current price of around $9.30, the upside potential based on a median price target of $12.00 is 29%. At the high target of $25.00, the upside potential is about 168.8%.

First-quarter fiscal 2023 revenue is forecast at $1.33 billion, up 2.5% sequentially and up 2.3% year over year. Adjusted EPS is forecast to come in at $0.03, compared with a loss of $0.01 per share in the previous quarter, and up 4.2% year over year. For the full 2023 fiscal year, analysts have forecast EPS of $0.62, down 27.3%, on revenue of $6.01 billion, up 5.8%.

Under Armour stock trades at a multiple of 14.2 times expected 2023 EPS, 11.4 times estimated 2024 earnings of $0.77, and 10.1 times estimated 2025 earnings of $0.87 per share. The stock’s 52-week range is $8.10 to $27.28. Under Armour does not pay a dividend. Total shareholder return over the past year is negative 54.5%.

By Paul Ausick