Earnings Previews: Cisco Systems, SQM, StoneCo

After U.S. markets closed on Monday, Canoo reported no revenue, as expected, and a narrower-than-expected adjusted loss per share of $0.14. The company also launched its Lifestyle Delivery Van (LDV) 190, expanding its electric cargo van offerings into a heavier class. Canoo said it is “making progress on achieving a production readiness level of 20,000 vehicles per year by the end of 2023.” Shares were down about 1% shortly after Tuesday’s opening bell.

Before markets opened on Tuesday, Home Depot reported better-than-expected earnings per share (EPS) and revenue. While revenue beat the consensus estimate by 1.7%, it fell 2% short of revenue in the year-ago fiscal quarter. The Dow Jones industrial average component reaffirmed fiscal year 2024 guidance and authorized a new $15 billion share buyback program. The stock traded up about 2%.

Sea Limited missed both top-line and bottom-line estimates. The Singapore-based company cited lukewarm consumer spending and a weak macroeconomic environment as responsible for a sharp drop in its mobile gaming business. Shares plummeted more than 25% early Tuesday.

Tencent Music also missed consensus estimates on the top and bottom lines. EPS missed by a penny, and revenue missed by $2 million (less than 0.1%) but beat the year-ago total by 5.5%. Shares traded up 0.4%.

After U.S. markets close on Tuesday and before they open on Wednesday, JD.com, Nu Holdings, Target, TJX and Zim Shipping are scheduled to report quarterly results.

Here is a look at what to expect when these three firms report earnings later on Wednesday.

Cisco Systems

Networking giant and Dow component Cisco Systems Inc. (NASDAQ: CSCO) has posted a share price boost of 13.1% over the past 12 months, including an increase of 13% for the year to date. Since registering a 52-week low in mid-October, the stock is up almost 40%, including a new 52-week high in mid-April. The sharp increase in the share price is likely due to the knock-on effects of the enthusiasm for AI. If anything, analysts expect no downside to Cisco’s business stemming from AI.

Analysts remain mildly bullish on the stock, with 12 of 29 having a rating of Buy or Strong Buy and 16 more rating it at Hold. At a recent price of around $54.00 a share, the upside potential based on a median price target of $56.00 is 3.7%. At the high price target of $73.00, the upside potential is 35.2%.

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For Cisco’s fourth quarter of fiscal 2023, analysts are expecting revenue of $15.05 billion, which would be an increase of 3.3% sequentially and 14.9% higher year over year. Adjusted EPS are forecast at $1.06, up about 5.9% sequentially and by 27.7% year over year. For the full fiscal year that ended in July, analysts estimate EPS of $3.81, up 13.3%, on revenue of $56.8 billion, up 10.2%.

Cisco’s stock trades at 14.2 times expected 2023 EPS, 13.3 times estimated 2024 earnings of $4.04 and 12.8 times estimated 2025 earnings of $4.40 per share. Its 52-week trading range is $38.60 to $54.14. Cisco pays an annual dividend of $1.56 (yield of 2.94%). Total shareholder return over the past year was 19.39%.

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