Earnings season continues, and while there have been some notable high profile misses for the fourth and final quarter of 2021, FactSet reports that with 56% of S&P 500 companies have issued earnings reports, 76% announced a positive earnings per share (EPS) surprise and 77% reported a positive revenue surprise.
Also, the blended earnings growth rate for companies listed on the S&P 500 index is 29.2%, marking the fourth consecutive quarter of earnings growth above 25%.
So while not perfect, corporate America continues to perform strongly as we emerge from the global pandemic. Over the coming week, we’ll get fourth-quarter results from several high-profile names, including an influential U.S. retailer and an upstart gambling firm.
Here are some stocks reporting earnings in the next week:
Monday, 14 Feb.
Continental Resources
Shale oil and gas producer Continental Resources Inc. (NYSE: CLR) has added about 155% to its share price over the past 12 months as oil prices have surged higher. The company is set to report fourth-quarter results after markets close on Monday. The stock swung wildly on Tuesday following an announcement by founder and CEO Harold Hamm cut his stake in the company from around 80% to about 24%. By early Thursday, the stock had regained all its losses, but shares had sunk again by the closing bell.
Of 30 brokerages covering the stock, 17 have put a Hold rating on the shares, and nine have a Buy or Strong Buy rating. At a recent share price of around $56.60, the stock trades just above its median price target of $56.50. At the high price target of $80, the upside potential is 41.6%.
Analysts are forecasting fourth-quarter revenue of $1.71 billion, which would be up 27.2% sequentially and 104% higher year over year. Adjusted earnings per share (EPS) are forecast at $1.66, up 38.7% sequentially and up from a loss per share of $0.23 in the year-ago quarter. For the full 2021 fiscal year, analysts expect Continental to report EPS of $4.50. It is compared to a loss of $1.17 per share last year, on sales of $5.53 billion, up about 114%.
Continental stock trades at 12.4 times expected 2021 EPS, 8.3 times estimated 2022 earnings of $6.69, and 9.7 times estimated 2023 earnings of $5.75 per share. The stock’s 52-week range is $21.61 to $59.82. The company pays an annual dividend of $0.80 (yield of 1.46%). Total shareholder return over the past year was 153%.
Tuesday, 15 Feb
Airbnb (ABNB)
On Feb. 15, we’ll get a report card on travel demand as homestay and vacation rental company Airbnb reports its latest earnings. Is travel back, or has the omicron variant of Covid-19 put a further kink in the recovery of leisure travel and tourism? Airbnb, which has come to serve as a bellwether for the industry, will provide a good idea of omicron’s impact with its Q4 numbers. Analysts are looking for the company to announce EPS of 3 cents on revenues of $1.46 billion.
ABNB stock comes into earnings on an upswing, having gained 17% in the past six months to trade at $175.31 per share as of its Feb. 11 opening. That growth includes a year-to-date bump of 4%. The gains in the company’s stock come after it reported third-quarter 2021 earnings that showed its gross booking value reached $11.9 billion. It is up 48% from the same quarter of 2020 and up 23% from the same quarter in pre-pandemic 2019. Gross bookings will continue to be the key data point to watch when the San Francisco-based company reports its Q4 numbers.
Roblox (RBLX)
Video game producer Roblox is in the news ahead of its latest earnings thanks to a nifty partnership it has struck with the National Football League (NFL). Ahead of this weekend’s Super Bowl, the NFL announced that it is entering the metaverse through a partnership with Roblox. The video game developer has created a metaverse video game called NFL Tycoon that allows users to hang out in a virtual reality world. They engage in activities ranging from playing football to managing a professional team.
The metaverse is a virtual reality world that is largely conceptual at this point. However, news of the NFL game was enough to send RBLX stock up 10% in a single trading session. The move higher is welcome given that the company’s share price has fallen 33% year-to-date amid stock market volatility. Investors move away from highly valued technology companies.
For its fourth-quarter earnings report on Feb. 15, analysts are expecting the still unprofitable Roblox to report an EPS loss of 13 cents on revenues of $767.65 million.
Wednesday, 16 Feb
Nvidia (NVDA)
On Feb. 16, we’ll hear from the leading chipmaker for the first time since its planned $66 billion acquisition of Arm Holding was called off due to regulatory concerns. The deal was originally announced in 2020 and its price had ballooned from an initial estimate of $40 billion to as much as $66 billion in Nvidia stock and cash. The proposed acquisition faced global regulatory scrutiny. In December, the U.S. Federal Trade Commission sued to block the transaction on antitrust grounds. Last year, British competition authorities announced a probe into the sale.
Now that the purchase of Arm Holdings has been called off, Wall Street will be looking for Nvidia to provide a road map forward. There are reasons to believe that Nvidia will be just fine as demand for its graphics processing units (GPUs) that are used in video game consoles and mobile computers continues to be sky-high.
Nevertheless, the company’s stock has taken a hit recently, having fallen 16% year-to-date to now trading at $259.16. For its earnings next week, Wall Street expects EPS of $1.22 on revenues of $7.42 billion.
Cisco Systems (CSCO)
egacy telecom company Cisco Systems will step into the spotlight next week with its latest quarterly figures, scheduled for Feb. 16. The Silicon Valley stalwart is expected to report EPS of 81 cents on revenues of $12.65 billion for the final quarter of 2021. And while the company, which was founded in 1984, is viewed by some investors as a tech dinosaur. It is important to remember that 85% of global internet traffic today runs on Cisco Systems’ connections. That 98% of Fortune 500 companies use Cisco’s software and solutions to run their daily operations.
Like other technology names, CSCO stock has come down so far this year as investors rotate into value and cyclical securities that are less sensitive to interest rates. However, at its Feb. 11 opening share price of $54.87, Cisco’s stock is up 15% in the last year and up 72% over the past five years.
Clearly, this company and its stock still have some life left in it. Cisco Systems has been aggressively expanding its 5G network architecture. The analysts will be watching to see how that infrastructure investment impacts the company’s bottom line.
Thursday, 17 Feb
Walmart (WMT)
Walmart reports earnings on Feb. 17. The Bentonville, Arkansas-based company’s stock has been stagnant over the past year, down 6% to $136.82. Yet many analysts remain bullish on the company and say it is only a matter of time before WMT stock rips higher. A strong earnings beat could prove to be the needed catalyst. Analysts have forecast that Walmart will report EPS of $1.49 on revenues of $151.5 billion.
The omicron wave of Covid-19 led to new lockdown measures. It kept consumers inside could hurt Walmart’s sales during the critical holiday period that runs from Thanksgiving through Christmas and New Year’s. If the consumer proved resilient, it could help to power both Walmart’s earnings and share price higher. However, the retailer is also contending with record inflation and wage growth as well as ongoing supply chain constraints. We’ll see how it all stacks up next week. Wall Street will be paying special attention to the company’s online sales growth, which has been a key driver during the pandemic.
Roku
Roku is set to release its 2021 fourth-quarter financial results on Feb. 17 after the market close. And shareholders of this streaming stock need to focus on any supply chain updates in the upcoming earnings report.
During Q3 2021, Roku added just 1.3 million net new active accounts. It is less than what the business gained in each of the previous three quarters. Besides falling engagement, with people spending less time at home and watching less TV. Roku has been plagued by one other big problem in recent quarters: supply chain bottlenecks. This is an issue that businesses across various sectors are currently facing, so it’s not unique to Roku.Â
Roku also has licensing agreements in place with several different TV manufacturers, who have been impacted by supply chain delays themselves. Inflation is causing higher component pricing, resulting in Q3 U.S. TV sales being lower than the pre-pandemic level in 2019.Â
Although the economic environment is out of Roku’s control, any commentary the leadership team gives investors about inflationary pressures or supply chain woes will be extremely important to listen to. Amidst the headwinds, being able to continue growing active accounts of 56.4 million and quarterly streaming hours of 18 billion (as of Sept. 30), would be a very encouraging sign.
No doubt, Roku is experiencing a major slowdown compared to the rapid growth it registered during the depths of the pandemic over the past few quarters. Problems with the global supply chain deserve blame. Investors should be looking for any clarity that management provides in this regard.Â
If there’s positive news, like seeing the hardware business return to gross profitability, as well as a continued increase in active accounts and hours streamed, it makes the stock, which is down nearly 70% over the past six and a half months, a compelling buy right now.
Friday, 18 Feb
DraftKings (DKNG)
It’s too bad the Super Bowl won’t be reflected in the earnings released by DraftKings on Feb. 18. The Boston-based sports betting company is going all-in on this year’s Super Bowl. It is hoping to capture some of the record $7.6 billion that is expected to be wagered on the big game between the Cincinnati Bengals and Los Angeles Rams.
DraftKings is heavily promoting itself in the lead-up to the Super Bowl and trying to draw in gamblers with several promotions. The company is estimated to be giving away $10 million in free bets and promotions to people who use its app to wager on the game. It includes a $1 million grand prize.
DraftKings is also one of only two gaming companies advertising during the Super Bowl. How the aggressive promotions and advertising impact the company won’t be known until its next earnings report. But it shows that the company is moving to take market share in the highly competitive sports betting and online gambling industry. A total of 30 states and Washington, D.C. have now legalized gambling in some form. It is paving the way for DraftKings and others to expand.
