Earnings Previews: KB Home, Darden Restaurants, Carnival

Tuesday afternoon’s and Wednesday morning’s noteworthy earnings reports were included in our Monday preview covering scheduled reports from retailer GameStop, software giant Adobe, venerable value stock General Mills and RV maker Winnebago.

Here’s a look at three stocks scheduled to report quarterly results after markets close Wednesday or before they open Thursday morning.

KB Home

After the markets close Wednesday, KB Home (NYSE: KBH) is scheduled to report quarterly results. The homebuilder’s stock traded down less than 1% for all of 2020, but starting from its 52-week low of $12.53 on March 18, through the end of the year, the shares rose by more than 275% before pulling back to post a gain of 206% for the last nine-and-a-half months of the year. So far in 2021, shares have added about 32%.

For the company’s first quarter of fiscal 2021, analysts are expecting earnings per share (EPS) to jump by 46% year over year to $0.92. Revenue is forecast to rise 40% to $1.21 billion. The consensus estimate for the 2021 fiscal year calls for EPS of $5.28 (up 69% year over year) on sales of $5.94 billion (up nearly 42%). These are pretty high expectations, especially looking out over the entire fiscal year.

Amazingly, perhaps, at a current trading price of around $44.20, the share price is about 7.7% below the consensus price target. At a high target of $58, the potential upside on KB Home stock is around 31%. Shares may be undervalued, trading at about eight times expected 2021 EPS and just seven times expected earnings in 2022 and 2023.

The stock’s 52-week high is $47.37, and KB Home pays an annual dividend of $0.60 (yield of 1.36%).

Darden Restaurants

Results from Darden Restaurants Inc. (NYSE: DRI) are expected before markets open on Thursday. The share price increased about 10% in 2020, but that gain includes a dip to a mid-March low of $43.11 before bouncing back to close the year at $118.76, a gain of around 175%. For the year to date, Darden shares are up more than 15%. The company owns and operates full-service restaurants including Olive Garden and LongHorn Steakhouse.

Analysts expect third fiscal quarter 2021 EPS of $0.69 (down 64% year over year) on sales of $1.63 billion (down nearly 31%). The consensus estimates for the full year call for EPS of $3.27 (about 4.5% higher year over year) on sales of $6.76 billion (down more than 13%).

Based on a current trading price of around $136.40, the stock trades about 3.2% below its consensus price target of $140.77 and about 21% below the high price target of $165. Shares trade at around 42 times expected 2021 EPS, 21 times estimated 2022 earnings and 18 times expected 2023 EPS.

The stock’s 52-week high is $147.93, and Darden pays an annual dividend of $1.48 (yield of $1.08%). Of 27 analyst ratings, 17 are Hold while nine are Buy or Strong Buy and one is Underperform.

Carnival

Carnival Corp. & PLC (NYSE: CCL) also is expected to report quarterly results before markets open on Thursday. The share price of the cruise line operator dropped about 57% in 2020 and had fallen by nearly 85% at its nadir. The stock had gained more than 35% in 2021 just a week ago, but that increase has lost about half that gain in the past two days after Carnival delayed its restart of its Costa Cruise Line by another month to May 1.

There have been five rating changes in March, three raising the price target on Carnival stock and three raising their ratings from Neutral to Buy or Outperform (only one of these raised its price target as well). The consensus price target on the stock is $23.36, and 15 of 25 total ratings have the stock as a Buy or Strong Buy.

Analysts expect a first fiscal quarter loss of $1.54 per share (compared to EPS of $0.22 in the same period last year) on sales of $197.34 million, a drop of 96% year over year. Estimates for the full fiscal year ending in November call for a loss per share of $4.29, a 43% improvement for the 2020 loss, and revenue of $4.94 billion, a drop of about 12% year over year. Last year, Carnival’s quarter was bolstered by decent results in the months of December and January.

Note, too, that revenue in 2018 and 2019 totaled nearly $19 billion and $21 billion, respectively. Carnival has easy comparable sales targets this year, but returning to those heady revenue totals of two years ago is a more distant port.

Looking ahead, shares trade at about 129 times estimated 2022 EPS of $0.20 per share and 15 times expected 2023 EPS of $1.73.

Carnival’s 52-week price range is $7.80 to $30.12. At a recent price of around $25.80, the shares have outrun their consensus price target but trade with a potential upside of nearly 80% to the high price target of $42.

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