Earnings Previews: Deere, Xpeng

After U.S. markets closed on Tuesday, Nu Holdings beat revenue and profit estimates but did not report earnings per share (EPS). Revenue for the quarter rose by 60% year over year, and net profit rose by 58.6%. Shares were up 0.4% in mid-morning trading on Wednesday.

Zim Integrated Shipping reported a net loss per share of $1.79, nearly double its expected loss, and revenue of $1.31 billion, also a miss. Zim also said it expects a fiscal year net loss of $100 million to $500 million. Because the dividend is paid as a percentage of profits, shareholders can expect no dividend payment for 2023. Shares traded down about 8%.

Before markets opened on Wednesday, JD.com beat estimates on both the top and bottom lines. Fiscal second-quarter revenue rose 7.6% year over year, and EPS rose by nearly 33%. Doom and gloom over the Chinese economy are too much to overcome, however. Shares traded down 2.9%.

Target reported better than expected EPS but missed the revenue estimate. Sales fell by 4.9% year over year. Then came the really bad news. Target issued downside guidance for third-quarter EPS and a same-store sales drop in the mid-single digits. Investors do not seem to mind. The stock traded up 4.9% Wednesday morning.

TJX Companies beat estimates on both the top and bottom lines. Shares traded up 3.3%.

Cisco Systems, SQM and StoneCo are expected to report results after markets close on Wednesday. The following morning, look for Tapestry and Walmart to share their quarterly results. Then Applied Materials and Farfetch are on deck later on Thursday.

Here is a look at what to expect when the following two firms report earnings before U.S. markets open on Friday.

Deere

Heavy equipment maker Deere & Co. (NYSE: DE) has seen its share price increase nearly 18% over the past 12 months. Shares posted a new 52-week high late last month and have come down about 4% from that peak.

Deere has gone shopping since reporting first-quarter results in May. In July, the company acquired Smart Apply, an Indianapolis-based maker of precision spraying equipment, for an undisclosed sum, and in August, Deere paid $250 million for Silicon Valley-based Bear Flag Robotics, an agtech company developing autonomous driving technology that is compatible with existing farming equipment (presumably Deere’s).

Analysts continue to be bullish on the stock, with 17 of 27 having a rating of Buy or Strong Buy, and 10 more have Hold ratings. At a recent price of around $432.00 a share, the upside potential based on a median price target of $458.00 is 6%. At the high price target of $560.00, the upside potential is 29.6%.

For the company’s third quarter of fiscal 2023, analysts expect Deere to report revenue of $14.06 billion, which would be down 12.5% sequentially and up about 8.5% year over year. (Deere’s April quarter is historically its strongest.) Adjusted EPS are expected to come in at $8.21, down 14.9% sequentially but up 33.3% year over year. For the full 2023 fiscal year ending in October, EPS are forecast at $31.85, up 32.8%, on sales of $55.21 billion, up 15.2%.

Deere stock trades at 13.6 times expected 2023 EPS, 13.4 times estimated 2024 earnings of $32.14 and 13.3 times estimated 2025 earnings of $32.46 per share. Its 52-week trading range is $328.62 to $450.00. The company pays an annual dividend of $5.00 (yield of 1.15%). Total shareholder return over the past year was 19.39%.

Xpeng

China-based electric vehicle (EV) maker Xpeng Inc. (NYSE: XPEV) has seen its share price drop by a third over the past 12 months. The shares reached their 52-week high in late July, recovering nearly 300% of that high. Like most other Chinese EV makers, Xpeng has been struggling to compete with Tesla and its seemingly endless price cuts. In the second quarter of this year, deliveries were down by a third compared to the first six months of last year.

Of 27 analysts covering the stock, 15 have a Buy or Strong Buy rating, and eight have given the stock a Hold rating. At a share price of around $16.00, the upside potential based on a median price target of $20.68 is about 29.3%. At the high price target of $32.50, the upside potential is 96.9%.

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Second-quarter revenue is forecast at $697.74 million, up 18.8% sequentially but down 37.0% year over year. The company’s adjusted loss per share is forecast at $0.34, compared to a per-share loss of $0.37 in the prior quarter. A year ago, Xpeng reported a loss per share of $0.43 in the June quarter. For the full 2023 fiscal year, the company is expected to post a loss per share of $1.26 compared with 2022’s loss of $1.43 per share on sales of $4.48 billion, up 15.2%.

Xpeng is not expected to report a profit in 2022, 2023 or 2024. The enterprise value to sales multiple for 2023 is 2.7, falling to 1.6 and 1.3 in 2024 and 2025, respectively. The 52-week trading range is $6.18 to $23.62. Xpeng does not pay a dividend, and the total shareholder return for the past year is negative 31.45%.

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