Earnings Previews: Conagra, Constellation Brands, Levi Strauss

There are a few remaining earnings reports to come out for the quarter ending in December (or in January), but investors and analysts are gearing up for next week. That’s when the first important earnings reports for the March quarter will be released. Of particular interest, of course, will be the reports from the nation’s big banks.

We have three earnings reports due Thursday that are notable, including two before markets open and one after they close.

Conagra

Conagra Brands Inc. (NYSE: CAG) is scheduled to report fiscal third-quarter results before markets open Thursday. The company’s stock dived nearly 30% in late March last year but managed to climb back to post a gain of nearly 9% for 2020.

CEO Sean Connolly said in February that the company will need to raise prices this year that it had absorbed during the COVID-19 lockdowns of last year. Those higher costs resulted from more consumer demand for packaged food to prepare at home. With commodity price increases and rising packaging costs, food costs have risen by more than 3.5% every month in the past 12.

Most analysts have the stock rated as a Buy or Strong Buy, with just two rating the stock a Hold and two more at either Underperform or Sell. The consensus price target is $38.20, just 2.1% higher than the stock’s current trading price of around $37.40. The high target of $44 implies a potential upside of around 18% to today’s price.

Analysts are looking for earnings per share (EPS) of $0.58 on revenue of $2.72 billion for the quarter. That’s an increase of 23.4% compared with last year’s EPS and 6.3% compared with last year’s revenue. In each of the past three quarters, Conagra has beaten the consensus EPS estimate by a double-digit percentage.

Shares currently trade at around 14 times expected 2021, 2022 and 2023 earnings. The stock was trading down less than 1% at $37.31 at last look, in a 52-week range of $30.12 to $39.34. Conagra pays an annual dividend of $1.10 (yield of 2.92%).

Constellation Brands

Beverage maker Constellation Brands Inc. (NYSE: STZ) will report fiscal 2021 fourth-quarter and full-year results before markets open Thursday. After dropping by nearly 45% in late March last year, shares ended 2020 with a gain of more than 17%. For the year to date, the stock is up more than 7%.

Because Constellation’s main pre-pandemic sales channel included bars and restaurants where people gathered in groups, the company was hit hard. The arrival of vaccines and subsequent reopening of some gathering places had added 10% to the share price by mid-February, before it plunged again in early March. As long as there’s uncertainty about whether businesses will be open or closed, Constellation’s stock could be in for some sharp swings.

Analysts generally like the stock, with 13 of 19 rating the shares Buy or Strong Buy and the rest with on a Hold rating. The consensus price target of $255.16 is about 9% higher than the current trading price and 28% below the high price target of $300.

Quarterly EPS is forecast to be $1.55, almost 25% lower than last year, while sales are expected to be down by about 2% at $1.87 billion. For the full year, EPS is forecast to rise by more than 7% to $9.72 and sales are forecast to rise by 2.2% to $8.53 billion. Constellation has beaten estimates by a double-digit percentage in each of the last four quarters and hammered the prior quarter estimate by nearly 30%.

Shares traded down about 1% in the noon hour Wednesday, at $233.96 in a 52-week range of $149.01 to $242.62. The company pays an annual dividend of $3.00 (yield of 1.27%).

Levis

Apparel maker Levi Strauss & Co. (NYSE: LEVI) reports fiscal 2021 first-quarter results after markets close Thursday. The company’s first quarter ended in February. As with most consumer cyclical stocks, Levi Strauss plunged last March and April, before recovering to post a 2020 share price gain of more than 5%. The stock has gained about 22% so far in 2021, and its 12-month gain is an impressive 126%.

Analysts are bullish on the stock, with all 10 rating the shares Buy or Strong Buy. The consensus price target of $26 is about $1.50 higher than the current trading price, implying a potential upside of 6.1% to the consensus target and 15.5% to the high target of $29.

For the quarter, analysts are forecasting EPS of $0.25, a decline of nearly 38% compared with the same period a year ago, on revenue of $1.25 billion, down 17% year over year. EPS of $0.30 in the August quarter was a surprise of 136% to the upside, and the company posted a 33% upside surprise in the November quarter.

At the current trading price of around $24.50, the shares trade at 25 times expected 2021 earnings, 19 times expected 2022 EPS and 17 times expected 2023 EPS. The stock’s 52-week trading range is $11.13 to $25.78, and Levi Strauss pays an annual dividend of $0.16 (yield of 0.66%).

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