Earnings Previews: Ciena, Express, GameStop

The three major U.S. equity indexes closed lower Monday. The Dow Jones industrials ended the day down by 1.4%, the S&P 500 closed 1.79% lower and the Nasdaq retreated 1.93%. All 11 sectors closed lower, with consumer cyclicals (−2.95%) and energy (−2.94%) falling the most. Utilities (−0.6%) and health care (−0.99%) posted the smallest losses.

On Monday, the Institute for Supply Management (ISM) reported that its non-manufacturing index for November rose to 56.5%, up from 54.4% in October and well above the 53.5% consensus estimate from economists. The report raised concerns that the Fed’s interest rate hikes would need to remain higher for longer. On Friday, the Bureau of Labor Statistics will issue its report on the producer price index (PPI) for November. Economists expect the index to rise by 0.2%, as it did in October. Core PPI is expected to rise by 0.2%, compared to no month-over-month increase in October.

The three major indexes traded lower Tuesday morning.

Before markets opened on Monday, AutoZone beat the consensus adjusted earnings per share (EPS) estimate by nearly 10% and the revenue estimate by more than 11%. Same-store sales rose by 5.6%. Shares traded down by about 1.6%.

Signet Jewelers also beat estimates on both the top and bottom lines. The company issued downside revenue guidance for its fourth quarter and full-year EPS guidance that was above estimates and in line with revenue estimates. Shares traded up by more than 15%.

After markets close Tuesday, MongoDB, SentinelOne, Stitch Fix and Toll Brothers are expected to report quarterly results. Look for Academy Sports and Campbell Soup to post their results first thing Wednesday morning.

Here is a preview of three companies set to reveal quarterly results late Wednesday or early Thursday.

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Network hardware and software maker Ciena Corp. (NYSE: CIEN) reports fourth-quarter fiscal 2021 results Thursday morning. Over the past 12 months, Ciena’s stock has dropped by more than 26%. For the quarter to date, however, shares are up more than 11%.

Ciena has been plagued with supply chain issues. In the fourth quarter of last year, Ciena posted more than $1 billion in revenue for the first time in the company’s 30-year history. It has fallen short in all three quarters so far this fiscal year, but analysts have it back on track to reach that amount again in the July quarter.

Analysts are solidly bullish on the stock, with 14 of 18 having a rating of Buy or Strong Buy. The rest have Hold ratings. At a recent price of around $45.00 a share, the upside potential based on a median price target of $57.00 is 26.7%. At the high price target of $71.00, the upside potential is 57.8%.

For the company’s fourth quarter of fiscal 2022, analysts have forecast revenue of $847.51 million, which would be down 2.4% sequentially and by 18.5% year over year. Adjusted EPS are forecast at $0.07, down 77.5% sequentially and 91.8% lower year over year. For the full 2022 fiscal year, Ciena is expected to report EPS of $1.38, down 52.7%, on sales of $3.51 billion, down 3.0%.

Ciena stock trades at 32.7 times expected 2022 EPS, 17.5 times estimated 2023 earnings of $2.57 and 12.9 times estimated 2024 earnings of $3.50 per share. The stock’s 52-week trading range is $38.33 to $78.28. The company does not pay a dividend, and total shareholder return for the past year was negative 26.4%.

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