Earnings Previews: AutoNation, Prologis, Tractor Supply

Earnings reports for the nation’s biggest banks yielded better-than-expected results this week, getting the June quarter earnings season off to a good start. Regional banks are in the spotlight next week, along with other companies of wide interest, including American Express, Cleveland-Cliffs, Coca-Cola, IBM, Kinder Morgan, Netflix, Nucor, Twitter, United Airlines and Verizon.

We already have previewed reports due from Alcoa (late Thursday), Kansas City Southern and Ericsson (both due early Friday).

There are no reports on the calendar for Friday afternoon, so we will turn now to a few reports scheduled for release before markets open on Monday.

AutoNation

Automobile retailer AutoNation Inc. (NYSE: AN) posted a new all-time high on Wednesday to cap a 12-month increase of around 140% to its stock price. Shares are up nearly 50% in 2021 as tight supply and strong demand have kept selling prices for new and used cars at high levels.

Of 11 surveyed analysts covering the stock, six have assigned a Hold rating while three rate the stock a Buy. The other two are split between Sell and Strong Sell ratings. Shares currently trade above the median price target of $100 but, at around $104.30 currently, the potential gain based on a high price target of $161 is 54%.

Forecast revenue for the second quarter is 31% higher than reported for the second quarter of 2020 and roughly flat with reported revenue in the first quarter. Estimated earnings per share (EPS) of $2.57 are 82% higher than in the same quarter last year but nearly 8% lower than in the prior quarter. For the full fiscal year, current forecasts call for a jump of 41% in EPS to $10.05 and a 16.3% increase in sales, to $23.71 billion.

AutoNation’s stock currently trades at around 10.4 times expected 2021 EPS, 10.8 times estimated 2022 EPS and 11.4 times estimated 2023 earnings. The stock’s 52-week trading range is $42.58 to $107.67, and AutoNation does not pay a dividend.

Prologis

The country’s largest logistics real estate investment trust, Prologis Inc. (NYSE: PLD), has added about 39% to its share price over the past 12 months, including a gain of about 29% so far in 2021. The company’s biggest customer is Amazon, and it also counts Home Depot and FedEx among its lessors. Prologis owns nearly 1 billion square feet of warehouse space.

Analysts are bullish on the company, with 10 of 20 rating the shares a Buy and another five rating the stock a Strong Buy. Four recommend holding the stock. At a trading price of around $126.80, the implied upside based on a median target price of $130 is 2.5%. At the high price target of $144, the implied upside is about 13.6%.

Forecast revenue for the second quarter is flat sequentially at $1.02 billion and up 8% year over year. EPS of $0.50 is a penny more than reported in the first quarter and down four cents year over year. For the full year, current estimates call for EPS of $2.02, up a penny, and sales of $4.15 billion, or 9.6% higher.

Prologis stock trades at around 63.2 times expected 2021 EPS, 57.6 times estimated 2022 EPS and 53.0 times estimated 2023 earnings. The stock’s 52-week range is $127.78 to $200.75. The company pays an annual dividend of $2.52 (yield of 2.01%).

Tractor Supply

Rural lifestyle retailer Tractor Supply Co. (NASDAQ: TSCO) has seen its share price improve by about 38% over the past 12 months, a higher percentage than competitor Home Depot and near Lowe’s gain of more than 40%. For the year to date, the shares are up about 36%, more than either Home Depot or Lowe’s over the same period. With a market cap of around $22 billion, Tractor Supply is also much smaller than either Home Depot ($341 billion market cap) or Lowe’s ($137 billion).

Of the 32 analysts surveyed, more than half (17) rate the stock a Hold. All but one of the other 15 rate the shares a Buy or Strong Buy. The stock trades at around $190.30, implying a potential upside to the median price target of $197 of 3.5%. At the high target of $220, the upside potential is 15.6%.

Second-quarter revenue is expected to reach $2.79 billion, up 8.8% year over year and more than 20% sequentially. EPS is forecast at $2.94, or four cents more year over year and up 39% sequentially. For the full year, Tractor Supply is expected to post EPS of $7.40, up 7.8% compared to 2020, on sales of $11.61 billion, an increase of 9.3%.

Tractor Supply shares trade at around 25.1 times expected 2021 EPS, 24.0 times estimated 2022 EPS and 22.3 times estimated 2023 earnings. The stock’s 52-week range is $127.78 to $200.75. The company pays an annual dividend of $2.08 (yield of 1.11%).

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