Earnings Previews: Darden Restaurants, FedEx, Rivian, Winnebago

Our earnings previews this week did not begin until Tuesday’s look at three companies reporting after markets close Wednesday and before they open again on Thursday: Adobe, Jabil and Lennar.

The action picks up a bit Thursday afternoon and again Friday morning. Here’s a look at the four companies set to report results at those times.

Darden Restaurants

The owner and operator of more than 1,800 restaurant locations, including Olive Garden and Longhorn Steakhouse, Darden Restaurants Inc. (NYSE: DRI) will report second-quarter fiscal 2022 results first thing Friday morning. Over the past 12 months, Darden stock has added about 35.5%, an amount slightly above its two-year appreciation of 33.5%. As is the case with most other food-related industries, costs and margins will be a focus, due to the rising cost of both food and labor.

Of 29 analysts covering the stock, 18 have a Buy or Strong Buy rating on the shares and another 10 have rated the stock at Hold. At a recent price of around $149.10 a share, the upside potential based on a median price target of $170.5 is 14.3%. At the high price target of $185, the upside potential is 24%.

Second-quarter revenue is forecast at $2.23 billion, which would be down 3.5% sequentially 34% higher year over year. Adjusted earnings per share (EPS) are forecast at $1.44, down 18% sequentially and up 95% year over year. For the full fiscal year ending in May, current estimates call for EPS of $7.61, up 76.5%, on sales of $9.54 billion.

Darden’s share price to earnings multiple for the 2022 fiscal year is 19.6. For fiscal 2023, the multiple to estimated EPS of $8.45 is 17.7, and for 2024, it is 15.9 times estimated EPS of $9.36. The stock’s 52-week range is $110.89 to $164.28. Darden pays an annual dividend of $3.45 (yield of 2.31%). Total shareholder return for the past year was 33.5%.

FedEx

Following its earnings report in September, FedEx Corp. (NYSE: FDX) shares plummeted to a 52-week low. Since then, the stock has added about 10.5%, but it still has a drop of 15% to show for the last 12 months. Rival UPS has seen its shares add about 26% over the 12-month period. Over the past two years, FedEx shares have gained about 50% while UPS stock is up more than 80%.

Package delivery’s primary tailwind is pricing power during the supply chain constraints and coronavirus surges of the past year. Higher wages and overall higher costs decimated margins in the prior quarter, forcing FedEx to slash its fiscal 2022 guidance. The company reports second-quarter fiscal 2022 results after the closing bell on Thursday.

Analysts are solidly bullish on the shares, with 21 of 30 brokerages covering the stock giving the shares a rating of Buy or Strong Buy. Nine more rate the stock at Hold. At a share price of around $240.70, the upside potential based on a median price target of $300 is 24.6%. At the high price target of $369, the upside potential is 53.3%.

The consensus second-quarter revenue estimate is $22.42 billion, up 1.9% sequentially and 9.0% higher year over year. Adjusted EPS are forecast at $4.29, down 1.8% sequentially and 15.3% year over year. For the full fiscal year ending in May, analysts are currently expecting EPS of $19.63, up 8%, on sales of $91 billion, up 8.3%.

FedEx’s share price to earnings multiple for fiscal 2022 is 12.3. For fiscal 2023, the multiple to estimated EPS of $22.08 is 10.9, and for 2024, it is 9.9 times estimated EPS of $24.27. The stock’s 52-week range is $216.34 to $319.90. FedEx pays an annual dividend of $3.00 (yield of 1.25%). Total shareholder return for the past year was a negative 14.5%.

Rivian

Since its initial public offering in early November, shares of Rivian Automotive Inc. (NASDAQ: RIVN) soared to a gain of nearly 120%, before pulling back to their current level of up about 12%. Most of the action occurred in the first two weeks of the company’s stint as a publicly traded company. Since then, the stock has bounced around its current price of about $112.

The company delivered a few of its R1T pickups to employees late in November and notified other early buyers of its limited Launch Edition model that deliveries would start in March. Deliveries of the standard edition may not begin until the second half of 2022. Rivian is set to report third-quarter results late on Thursday.

Since the post-IPO quiet period ended, 10 of 14 analysts have given the stock a Buy or Strong Buy rating and the rest have a Hold rating. At a share price of around $112.50, the upside potential based on a median price target of $137.50 is 22%. At the high target of $170, the upside potential is 51%.

Analysts expect Rivian to report sales of $1.03 million and an adjusted loss per share of $6.84 for its first-ever quarter. For the full fiscal year ending in December, analysts are forecasting an adjusted loss per share of $19.07 on sales of $71.82 million.

For 2022, analysts expect Rivian’s enterprise value to sales multiple to be 29.3. For 2023, the multiple is forecast at 12.1. Rivian does not pay a dividend.

Winnebago

Shares of recreational vehicle maker Winnebago Industries Inc. (NYSE: WGO) have added about 17% to their value over the past 12 months. Over the past two years, the share price has added more than 42%, including a plunge of 67% in the last half of February and the first half of March last year. Since its nadir on March 18, the stock has risen by 232%.

Sales of self-contained RVs have soared during the pandemic and its aftermath as the vehicles give people a chance to get out of the house without taking all the risks associated with that once-harmless activity. Winnebago’s share price has leveled out since the summer. So far, Winnebago and other makers of outdoor activity products have been able to manage costs by passing them along to eager buyers. When the company reports its fiscal first-quarter 2022 results Friday morning, investors will be listening for clues to how long that pricing power will last.

Of 10 analysts covering the stock, half rate the shares a Buy or Strong Buy, and the other half have a Hold rating on the stock. At a share price of around $67.70, the upside potential to a median price target of $85 is 25.6%. At the high price target of $115, the upside potential is nearly 70%.

First-quarter revenue is forecast at $1.03 billion, flat sequentially but up 22.6% year over year. Adjusted EPS are forecast at $2.34, down 8.8% sequentially and up 38% year over year. For the full fiscal year ending in August, current estimates call for EPS of $9.49, up 11%, on sales of $4.28 billion, up 18%.

Winnebago’s share price to earnings multiple for the 2022 fiscal year is 7.7. For fiscal 2023, the multiple to estimated EPS of $9.48 is also 7.7. There are no longer range estimates. The stock’s 52-week range is $58.33 to $87.53. Winnebago pays an annual dividend of $0.72 (yield of 1.04%). Total shareholder return for the past year was 10.3%.

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