Earnings Previews: Cazoo, Conagra, Constellation Brands, Levi Strauss

In a slow week for earnings, three firms reported quarterly results after markets closed on Tuesday and before they reopened on Wednesday. Solar tracking systems maker Array Technologies missed on earnings but beat on revenues with a 22% year-over-year increase. Shares traded up by about 15% in Wednesday’s premarket.

Cannabis products maker Tilray beat analysts’ earnings forecast but missed on revenues, even though sales rose by nearly 20% year over year. The stock traded up by around 2% in premarket action. Metals recycler Schnitzer Steel met earnings expectations and beat on revenues, but investors were not impressed and shares traded flat.

After markets close Wednesday and before they reopen again on Thursday, four notable earnings reports are expected.

Cazoo

European online automobile retailer Cazoo Group Inc. (NYSE: CZOO) reports quarterly results first thing Thursday morning. The company came public last August in a SPAC merger, and the stock price has dropped by about 68% since the IPO.

Cazoo offers car subscriptions that include the (new or slightly used) car, insurance, maintenance, taxes and services for a single monthly price. Subscribers pay only for fuel and batteries. The company has expanded outside its U.K. home and announced last week that it had secured a $55.5 million credit facility to help lift its subscription business on the continent.

Only three brokerages cover the stock. Two have a Buy rating on the shares, and the other rates the stock at Hold. At a recent price of around $3 a share, the upside potential based on a median price target of $6.64 is 121%. At the high price target of $9.02, the upside potential is 200%.

There are no earnings or revenue estimates for the fourth fiscal quarter of 2021, which ended in December. For the full fiscal year, analysts have forecast revenue of $869.34 million, up 291% year over year. Cazoo is expected to post a loss per share of $0.32 for the year.

The company is not expected to post a profit in 2022 or 2023. The sales to enterprise value multiple for 2021 is 2.8. For 2022 and 2023, the multiple is 0.9 and 0.5, respectively. The stock’s 52-week trading range is $2.19 to $10.27. Cazoo does not pay a dividend. Total shareholder return for the past year is negative 70.5%.

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Conagra

Over the past 12 months, the share price of packaged food giant Conagra Brands Inc. (NYSE: CAG) has dipped by about 5.3%. As recently as mid-February, the stock traded at a breakeven point for the year. Rising costs are testing Conagra’s pricing power and investors’ willingness to stick with the stock. The company reports results early Thursday morning.

Most analysts following the stock (13 of 17) have a Hold rating on it, while the rest rate the shares at Buy or Strong Buy. At a share price of around $34.10, the upside potential based on a median price target of $36.00 is about 5.6%. At the high price target of $44.50, the upside potential is 30.5%.

The consensus estimate for fiscal third-quarter revenue is $2.84 billion, which would be down 7.1% sequentially but up by 2.5% year over year. Earnings per share (EPS) are expected to come in at $0.58, down 9.6% sequentially and 1.7% lower year over year. The current estimates for the 2022 fiscal year ending in May call for EPS of $2.43, down about 8.1%, on sales of $11.45 billion, up 2.3%.

The stock trades at 14.1 times expected 2022 EPS, 13.0 times estimated 2023 earnings of $2.63 and 12.4 times estimated 2024 earnings of $2.75 per share. Conagra’s 52-week trading range is $30.06 to $39.09, and the company pays an annual dividend of $1.18 (yield of 3.67%). Total shareholder return over the past 12 months is negative 5.8%.

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