Earnings Previews: DocuSign, Kroger, Smith & Wesson

After markets closed on Tuesday, Gitlab beat estimates for both earnings per share (EPS) and revenue. The company raised EPS and revenue guidance for its fiscal third quarter and for the full 2024 fiscal year that ends in January. Shares traded up 7% shortly after Wednesday’s opening bell.

Zscaler also posted better-than-expected EPS and revenue. Earnings more than doubled and revenue increased by 43% year over year. Shares traded down about 0.2% early Wednesday, largely due to general weakness in the outlook for cloud security stocks.

American Eagle Outfitters, ChargePoint, C3.ai, GameStop and UiPath are set to report quarterly results after U.S. markets close on Wednesday.

Here is a preview of what analysts are looking for when the following three companies report results late Thursday or early Friday.

DocuSign

Shares of cloud-based signature and contract management software vendor DocuSign Inc. (NASDAQ: DOCU) have dropped by 4% over the past 12 months. Over the past two years, the stock is down more than 62%. So far in 2023, the stock is down about 5.7%; from a peak in early February, shares have dropped almost 23%. At the same time, cash flow from operations is at new highs, pushing up free cash flow as well. The company reports quarterly results after Thursday’s closing bell.

The company is getting some stiff competition from the likes of Google, which recently rolled out an e-signature capability in its Workspace products, Box and DropBox, both of which have had similar capabilities for a while. Perhaps a dividend payment would tilt the playing field back in DocuSign’s favor? Or a share buyback even?

Of 25 brokerages covering the stock, six have a Buy or Strong Buy rating and 16 have Hold ratings. At a recent share price of around $52.00, the implied gain based on a median price target of $67.00 is 28.8%. At the high price target of $84.00, the upside potential is 61.5%.

Second-quarter revenue is forecast at $677.42 million, which would be up 2.4% sequentially and by 8.8% year over year. Adjusted EPS are forecast at $0.66, down 8.8% sequentially but by 50.0% year over year. For the full 2024 fiscal year that ends in January, DocuSign is expected to post EPS of $2.56, up 26%, on sales of $2.72 billion, up 8.2%.

DocuSign trades at 20.4 times expected 2024 EPS, 19.5 times estimated 2025 earnings of $2.68 and 17.2 times estimated 2026 earnings of $3.05 per share. The 52-week trading range is $39.57 to $69.45. The company does not pay a dividend, and the total shareholder return for the past year is negative 4.0%.

Kroger

Kroger Co. (NYSE: KR) has dropped more than 7% from its share price over the past 12 months. The grocery store operator is expected to report quarterly results early Friday morning.

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