The three major U.S. equity indexes closed higher Friday, with the Nasdaq adding 3.34%, the S&P 500 rising by 3.06% and the Dow Jones industrials closing up 2.68%. All 11 sectors ended higher, led by materials (up 4%) and communications services and consumer discretionary (both up 3.8%). Energy stocks (up 1.3%) posted the smallest daily gain Friday. Trading in Monday morning’s premarket was slightly higher.
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The big macroeconomic news this week comes on Thursday when the Federal Reserve’s favorite inflation index, the Personal Consumption Expenditure price index for May is announced. Economists are expecting a sharp month-over-month increase, both in the nominal and core indexes.
After markets close Monday afternoon, Nike and Trip.com are scheduled to report quarterly results.
Here is a look at four companies scheduled to release quarterly results early Wednesday.
Bed Bath & Beyond
Shares of specialty retailer Bed Bath & Beyond Inc. (NASDAQ: BBBY) have dropped more than 76% over the past 12 months and posted a new 52-week low earlier Monday month. Since March 29, the shares are down 74%, thanks in part to a weak fourth-quarter report in April that came with a warning that more bad news would be coming in subsequent quarters.
BofA analysts who visited some company stores recently noted that store hours are being cut and the air conditioning is being turned down. Is this a play to remain independent or a ploy to attract a private equity buyer? Short interest in Bed Bath & Beyond stock is 31.4%, according to Fintel data.
Analysts remain bearish on the stock. Of 20 brokerages covering the firm, nine have Sell or Strong Sell ratings while eight rate the stock at Hold. At a recent share price of around $7.00, the shares trade at their median price target. At the high price target of $17.40, the upside potential is 150%.
Bed Bath & Beyond is expected to post fiscal first-quarter revenue of $1.51 billion, which would be down 26.4% sequentially and by 22.6% year over year. Analysts are expecting a loss per share of $1.38, compared with a per-share loss of $0.92 in the prior quarter and earnings per share (EPS) of $0.05 in the year-ago quarter. For the full 2023 fiscal year ending in February, current estimates call for a loss per share of $2.72, compared to a loss per share of $1.08 last year. Revenue is expected to fall by 8.8% to $7.18 billion for the fiscal year.
The stock trades at 13.9 times estimated 2025 earnings of $0.50 per share. Bed Bath & Beyond is not expected to post a profit in 2023 or 2024. The stock’s 52-week range is $5.95 to $39.30, and the company does not pay a dividend. Total shareholder return over the past 12 months was negative 76.9%.
General Mills
Shares of food products giant General Mills Inc. (NYSE: GIS) have added more than 23% over the past 12 months, including a drop of 10% between mid-January and early March. The pandemic with its stay-at-home directives was a positive for the company, and rising inflation has moved the needle higher over the past couple of months. At a conference two weeks ago, the CEO said the company will continue to target growth of 2% to 3%, regardless of economic conditions, and raising prices to offset cost increases also remains an option.
Sentiment on the stock is muted. Of 20 analysts covering the shares, 12 have a Hold rating and only four rate the stock at Buy or Strong Buy. The stock trades at around $70.60, above the median price target of $68.00. At the high target of $82.00, the implied upside is 16.1%
Fiscal fourth-quarter revenue is forecast at $4.81 billion, up 5.9% sequentially and 6.4% year over year. Adjusted EPS are forecast at $1.01, up 20.0% sequentially and 11.0% higher year over year. Estimates for the 2022 fiscal year ended in May call for EPS of $3.82, up 0.8%, on sales of $18.89 billion, up 4.2%.
General Mills stock trades at 18.5 times expected 2022 EPS, 17.8 times estimated 2023 earnings of $3.72 and 17.0 times estimated 2024 earnings of $4.16 per share. The stock’s 52-week range is $56.67 to $73.99. General Mills pays an annual dividend of $2.04 (yield of 2.89%). Total shareholder return for the past year was 23.2%.
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Paychex
Paychex Inc. (NASDAQ: PAYX) is the country’s second-largest integrated human resources outsourcer of staffing and employment services such as payroll and insurance. The stock has added more than 21% to its share price over the past 12 months but has tumbled by 12.7% since posting a 52-week high in early April. The company announced two weeks ago that it had surpassed 100,000 clients for whom it administers 401(k) programs. Paychex is the nation’s largest 401(k) recordkeeper and has been for 11 consecutive years.
Of 19 analysts covering the stock, 13 have a Hold rating and just three rate the shares at Buy or Strong Buy. At a share price of around $122.40, the upside potential based on a median price target of $140.00 is 14.4%. The high price target of $162.00 implies upside of about 34.8% to the current price.
Analysts expect fiscal fourth-quarter revenue of $1.11 billion, down 13.2% sequentially but up 7.8% year over year. Adjusted EPS are expected to come in at $0.79, down 31% sequentially and up 9.7% year over year. For full fiscal 2022, analysts currently forecast EPS of $3.76, up 23.6%, and revenue of $4.54 billion, up 11.9%.
The stock trades at 32.6 times expected 2022 EPS, 30.1 times estimated 2023 earnings of $4.07 and 27.8 times estimated 2024 earnings of $4.40 per share. The stock’s 52-week range is $104.01 to $141.92. Paychex pays an annual dividend of $2.64 (yield of 2.58%). Total shareholder return for the past 12 months was 20.2%.
Schnitzer Steel
Schnitzer Steel Industries Inc. (NASDAQ: SCHN), a recycling firm for both ferrous and non-ferrous metals, posted a new 52-week high shortly after reporting first-quarter results in April. Since then, the shares have plunged by nearly 44%, and they are down 31.3% for the past 12 months. The company reported quarterly results two weeks ago that beat on both the top and bottom lines but had only a minimal effect on the company’s sliding share price. Steel prices have dropped by nearly 17% since early May on fears of a global recession.
Just three analysts cover the stock, and they are split in their views. One rates the shares at Strong Buy, one has a Buy rating and the other has the shares at Hold. At a share price of around $32.90, the upside potential to a median price target of $69.00 is 110%. At the high price target of $91.00, the upside potential is 177%.
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