Earnings Previews: Affirm, AMC Entertainment, Disney

The three major U.S. equity indexes closed higher Friday. The Dow Jones industrials ended the day up 1.26%, the S&P 500 closed 1.36% higher and the Nasdaq saw a gain of 1.28%. All 11 sectors closed higher, with materials (3.41%) and financials (1.87%) posting the biggest gains. Utilities and healthcare (both 0.57%) had the smallest gains.

This week’s economic calendar includes the monthly report on the consumer price index (CPI). Economists are expecting the Thursday morning release to show that the index increased month over month in October by 0.7%. Core CPI (excluding food and energy) is expected to tick down from 0.6% to 0.5%. The weekly report on new claims for unemployment insurance will be released Wednesday. New claims are expected to rise from last week’s 217,000 to 220,000.

The three major indexes traded higher in Monday’s premarket session.

Before markets opened, Palantir Technologies reported a one-penny miss on EPS and revenue in line with expectations. The company lowered fourth-quarter revenue guidance to a new range of $603 to $505 million. Analysts had a consensus estimate of $506.6 million. The stock traded down about 2% in Monday’s premarket.

NiSource reported adjusted earnings per share (EPS) that met the consensus estimate, while revenue of $1.09 billion was better than expected. The company lowered full-year EPS guidance from a prior range of $1.50 to $1.57 to a new range of $144 to $1.46. NiSource also announced a growth plan that it expects to boost adjusted EPS by 6% to 8% annually through 2027. Shares traded down 1.1% Monday morning.

Ballard Power reported inline EPS and missed on revenue. Shares traded up about 0.7%.

Activision Blizzard and Lyft take their turns in the earnings spotlight after U.S. markets close on Monday. Before U.S. markets open on Tuesday, Constellation Energy and GlobalFoundries are on deck to report quarterly earnings.

Here is a preview of three companies set to report quarterly results after U.S. markets close on Tuesday.

Affirm

Since posting an annual high exactly one year ago, shares of payment processor Affirm Holdings Inc. (NASDAQ: AFRM) have dropped by around 90%. Most of that decline (84%) occurred this year. Affirm, a buy-now-pay-later lender, posted its 52-week low after reporting March-quarter earnings. The bad news continued with the June-quarter report, and expectations for the September quarter, the first of fiscal 2023 for Affirm, are not encouraging.

Of 18 analysts covering Affirm, eight have a Buy or Strong Buy rating and seven others rate the stock a Hold. At a recent share price of around $16.10, the implied gain based on a median price target of $28.50 is 77%. Based on the high price target of $53.00, the upside potential for the stock is nearly 230%.

Analysts expect Affirm to report fiscal first-quarter revenue of $360.47 million, which would down 1.0% sequentially but up 33.8% year over year. They also expect the company to report an adjusted loss per share of $0.88, worse than the prior quarter’s loss of $0.65 per share but better than the year-ago loss of $1.13 in the first quarter. For the full fiscal year ending in June, Affirm is expected to post a loss per share of $3.28, worse than last year’s loss of $2.51 per share, on revenue of $1.7 billion, up 26.1%.

Affirm is not expected to post a profit in 2023, 2024 or 2025. The enterprise value to sales multiple is expected to be 4.3 in 2023. Based on average estimated sales of $2.22 billion and $2.8 billion for 2023 and 2024, respectively, the multiple is 3.3 for 2023 and 2.6 for 2024. The stock’s 52-week trading range is $13.64 to $176.65. Affirm does not pay a dividend. Total shareholder return for the past year was negative 90.2%.