Earnings Previews: Broadcom, Costco, Gap, Smith & Wesson, Big Lots

As earnings season winds down, there are still some interesting companies left to report. Many retailers are reporting results for the quarter that ended in January and there are a few tech companies on the schedule as well.

Looking ahead, after markets close today, we are scheduled to receive earnings reports from American Eagle Outfitters, Marvell Technology and Snowflake. Before markets open Thursday, Kroger and Michaels are expected to report results.

Among the stocks that reported after markets closed Tuesday and before they reopened Wednesday morning, discount retailer Dollar Tree managed to beat profit estimates but fell short on revenue. Michaels stock was up around 23% following the company’s agreement to be acquired by private equity firm Apollo Management for $3.3 billion. Apollo also led another acquisition this morning, the $6.25 billion buyout of Las Vegas Sands’ Vegas assets.

After markets close on Thursday we are scheduled to get four earnings reports, followed by one more before markets open on Friday.

Broadcom

On Thursday afternoon, Broadcom Inc. (NASDAQ: AVGO) is scheduled to report results, and the company should have plenty of positive news. The stock gained about 45% in 2020 and has added more than 9% so far this year, even after the big dip in late February.

Analysts are solidly behind the stock, with all but two of 29 firms rating the stock a Buy or Strong Buy. The consensus 12-month price target on the stock is $487.46, less than 2% higher than the current trading price of around $478.00. At the high price target of $580, the potential upside on the stock is around 20%.

The consensus earnings per share (EPS) estimate for the company’s fiscal first quarter of 2021 is $6.55, an increase of around 25% year over year, on a revenue increase of almost 13% to $6.61 billion. For the 2021 fiscal year, current estimates call for EPS of $26.23, up 5% year over year, on sales totaling $26.4 billion, an increase of 10%.

Based on estimated EPS for fiscal 2021, the stock trades at a multiple of 18, while the multiple is around 17 for estimated 2022 earnings and 16 for 2023 EPS.

Costco

Costco Wholesale Corp. (NASDAQ: COST) saw its share price improve by a third in 2020, but shares have dived by more than 13% so far in 2021. It is hard to pinpoint a reason for the decline. The company announced last week that it is raising its starting wage to $16 an hour this month, which should improve its $23.50 hourly average, well above Walmart’s $11 starting pay and $14 average.

A majority (18 of 29) analysts rate the stock a Buy or a Strong Buy, while 11 rate the stock as a Hold. The consensus price target is $400.37, and shares traded Wednesday at around $325. Indicating a potential upside of around 23%. At the high price target of $435, the potential gain on the stock is around 34%.

Analysts are looking for quarterly EPS of $2.45 and sales of $43.8 billion, both double-digit improvements over the same quarter last year. For fiscal 2021, EPS is forecast at $10.13 on sales of $184.1 billion.

At the current price, the stock trades at around 32 times expected 2021 EPS, 30 times expected 2022 earnings and 26 times estimated 2023 EPS.

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