Earnings Previews: Foot Locker, PDD (Pinduoduo), Tencent Music

In the first half-hour of Friday trading, the Dow Jones industrials were down 0.57%, the S&P 500 down 0.25% and the Nasdaq down 0.08%.

After U.S. markets closed on Thursday, FedEx beat the consensus earnings per share (EPS) estimate by nearly 25% but missed the revenue target. The company also issued upside EPS guidance for fiscal 2023 (which ends in May) and said that its efforts at cutting costs are starting to pay off. Shares traded up more than 10% early Friday.

Before markets opened on Friday, Algonquin Power reported better-than-expected results on both the top and bottom lines. The utilities firm also reaffirmed previous EPS guidance, and shares traded up 1.8%.

Ballard Power beat the consensus EPS estimate but missed on revenue. The company pointed to the “delayed adoption” of its technology in China and “low activity” in its partnership with Weichai. Shares traded down 3.6% Friday morning.

Here is a preview of what to expect when the following three companies post results on Monday or Tuesday.

Foot Locker

Shares of Foot Locker Inc. (NYSE: FL) have risen by more than 33% over the past 12 months, despite dumping Kanye West’s (aka, Ye) Yeezy brand following the rapper’s antisemitic comments in October. The company’s relationship with Nike continues to be frayed, but the damage has been contained so far. Foot Locker’s guidance, any comments on Nike and its solid dividend are likely to carry more weight than quarterly results. Look for the company to report earnings before Monday’s opening bell.

Of 21 analysts covering the company, 16 are waiting on the sidelines with a Hold rating. Five have a Buy or Strong Buy rating. At a recent share price of around $43.00, the stock traded above its median price target of $40.00. At the high price target of $62.00, the upside potential is 44.2%.

Fourth-quarter revenue is forecast at $2.14 billion, which would be down 1.7% sequentially and by 8.5% year over year. Adjusted EPS are forecast at $0.50, down 60.9% sequentially and 70.0% lower year over year. For the full 2023 fiscal year that ended in January, Foot Locker is expected to report EPS of $4.48, down 42.3%, on revenue of $8.56 billion, down 4.5%.

Shares trade at 9.5 times expected 2023 EPS, 10.4 times estimated 2024 earnings of $4.09 and 9.5 times estimated 2025 earnings of $4.48 per share. Foot Locker’s 52-week trading range is $23.85 to $47.22. The company pays an annual dividend of $1.60 (yield of 3.9%). Total shareholder return for the past year was 40.44%.

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PDD Inc. (NASDAQ: PDD) focuses on an e-commerce marketplace Pinduoduo, which matches China’s farmers and agricultural product wholesalers directly with the country’s consumers. The stock has soared by nearly 122% over the past 12 months, with nearly half the increase coming in the past six months. The company, formerly known as Pinduoduo, reports first thing Monday morning.

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