Earnings Previews: Alibaba, Bath & Body Works, KE Holdings

In the noon hour on Tuesday, the Dow Jones industrials were down 0.6% and the S&P 500 down 0.24%, while the Nasdaq traded 0.25% higher.

After U.S. markets closed on Monday, Canoo reported a smaller-than-expected adjusted loss per share and, as expected, reported no revenue. The company reported $69.7 million in cash and equivalents as of Monday and projected second-quarter operating expenses of $40 to $60 million and capital expenditures of $10 million to $20 million. Shares traded up 0.67% Tuesday.

Nu Holdings handily beat the consensus earnings per share (EPS) and revenue estimates. According to Monday’s Form 13-F filing, Berkshire Hathaway maintained its stake of about 107 million shares in Nu Holdings. Shares of the Brazilian fintech firm traded up by less than 1%.

Before U.S. markets opened on Tuesday, Home Depot beat the consensus EPS estimate by a penny and missed on revenue. Sales were 4.2% below the year-ago quarter’s level. Home Depot also issued downside fiscal-year EPS and revenue guidance. Same-store sales are expected to decline by 2% to 5%. Shares traded down 1.7%.

iQIYI just beat the consensus revenue estimate and met the adjusted EPS estimate. The stock traded down 8.1%.

Sea Limited reported a big miss on the consensus EPS estimate and revenue that was higher than expected. Revenue increased by 4.9% year over year. Shares traded down 15.9%.

Tencent Music beat estimates on both the top and bottom lines. Shares traded down 3.6% nonetheless.

After U.S. markets close on Tuesday or before they open on Wednesday, Kyndryl, Star Bulk Carriers, Target and TJX Companies are scheduled to report quarterly results. Look for Cisco and SQM to report later on Wednesday.

Walmart reports first-quarter results first thing Thursday morning, along with these three companies.

Alibaba

Over the past 12 months, shares of Alibaba Group Holding Ltd. (NYSE: BABA) traded essentially flat with plenty of big swings. But over the past two years, shares have dropped about 57% of their value. Aside from the country’s strict lockdown rules that were not repealed until early this year, the company managed to get sideways with the Chinese government, and that is never a good thing. The holding company has announced a six-piece split of its individual companies that could unlock some value, along with calling a halt to government fears that the e-commerce giant is getting too big.

Of 46 analysts covering the stock, 43 have ratings of Buy or Strong Buy. The others rate it at Hold. At a recent price of around $88.00 a share, the upside potential based on a median price target of $143.90 is about 73.8%. At the high price target of $217.73, the upside potential is 147.4%.

For Alibaba’s fourth quarter of fiscal 2023, analysts are expecting revenue of $30.05 billion, which would be down 16.3% sequentially and by 6.6% year over year. Adjusted EPS are expected to come in at $1.36, down 51.2% sequentially but 8.8% higher year over year. For the full fiscal year that ended in March, Alibaba is expected to report EPS of $7.61, down 8.40%, on sales of $125.02 billion, down 7.1%.

Alibaba shares trade at 11.6 times expected 2023 EPS, 10.2 times estimated 2024 earnings of $8.63 and 9.0 times estimated 2025 earnings of $9.81 per share. The stock’s 52-week trading range is $58.01 to $125.84. The company does not pay a dividend, and total shareholder return for the past 12 months is 2.10%.