Week in Preview: Nike and Darden Earnings Could Spread Early Holiday Cheer
Dec 19th 2010 7:30AM
Updated Dec 19th 2010 9:05PM
Companies continue to file quarterly reports late in the season, and a few are poised to spread some early holiday cheer for investors this week. Analysts surveyed by Thomson Reuters expect strong earnings results from Nike (NKE), Bed Bath & Beyond (BBBY) and Darden Restaurants (DRI), among others. Here's a rundown:
During its fiscal second quarter, Nike (NKE) boosted its dividend and appointed a new general manager for Nike Japan. Analysts forecast that earnings for the quarter will come in at 88 cents per share, a 13.6% increase from the same period of last year. The world's leading athletic footwear maker also is expected to post revenue of $4.8 billion for the three months that ended in November, which is 9.3% more than the same period a year earlier.
Looking ahead to the third quarter, analysts expect both sequential and year-over-year growth in both earnings and revenue. Nike's earnings results have not fallen short of consensus estimates in the past five quarters, beating analyst expectations by 13 cents per share in the first quarter.
Meanwhile, Nike's earnings-per-share growth forecast is 10.5% for the long term, with a forward price-to-earnings ratio of 19.3. That's less than the trailing P/E ratio and the industry average, meaning the company has become a better value. The company's dividend yield is 1.26%. First Call rates Nike a buy and analysts' mean price target is $95 per share. Shares reached a 52-week high of $90.52 last week, growing more than 15% from three months ago.
Bed Bath & Beyond
Analysts anticipate that Bed Bath & Beyond (BBY), the nation's largest domestics superstore retailer, will Wednesday report third-quarter earnings that grew 10.8%, year over year, to 65 cents per share. The retailer introduced new products during the three months that ended in November, which analysts predict will help boost revenue to $2.1 billion for the quarter, up 6.6% from the year-ago quarter.
Analysts expect full-year earnings to grow 17.9% to $2.80 per share on revenue of $8.5 billion, which would represent a 9% rise from last year. In recent quarters, earnings results have consistently beat expectations by as much as 15 cents per share.
Bed Bath & Beyond's long-term EPS growth forecast of 13% is higher than that of Walmart (WMT). The forward P/E ratio is 16.3, which is less than the industry average. The company logs a PEG ratio of 16.3 and a 16.6% return on equity. The consensus recommendation rates Bed Bath & Beyond a buy, with a mean price target of $50.33. Shares also reached a 52-week high last week of $48.95 per share, which is more than 15% higher than the price three months ago.
Orlando-based Darden (DRI) operates the Olive Garden and LongHorn Steakhouse chains. For its fiscal second quarter, in which the company appointed a new general counsel and announced changes to its Red Lobster chain, Darden is expected to post earnings of 54 cents per share. That's up from a year-ago profit of 43 cents per share.
For the three months that ended in November, analysts expect revenue to increase 5.3% to $1.7 billion. Analysts foresee that both earnings and revenue numbers will top those from the first quarter and the year-ago quarter. The company's per-share earnings results have topped analysts' expectations in four of the past five quarters.
Darden's long-term EPS growth forecast of 12.2% is healthier than that of competitor DineEquity (DIN). Its forward P/E ratio is 14.4, which is below both the industry average and the company's trailing P/E. The PEG ratio is 1.2, the ROE is 24.6% and the dividend yield is 2.3%. Analysts have rated Darden a buy for more than 90 days, with a current mean price target of $52.87. Shares have grown more than 10% since the beginning of the quarter, trading near the 52-week high of $50.83 recently.
But Jabil Circuit (JBL) could be the biggest earnings winner of the week. During the three months that ended in November, the Florida-based tech company closed a note offering. Analysts expect Jabil to post fiscal first-quarter earnings that jumped 41.8% from a year ago to 55 cents per share on revenue that increased 28.4% to $3.9 billion.
Jabil has a long-term EPS growth forecast of 12.0% and a forward P/E of only 8.4. The PEG ratio is 0.7 and the dividend yield is 1.6%. The average analyst recommendation rates Jabil a buy, with a mean price target of $18.83. Shares have grown some 35% from three months ago, closing the week at $17.47.
Others to Watch
Looking for more companies to keep an eye on this week? Adobe Systems (ADBE), Carnival (CCL) and Walgreens (WAG) also are forecast to post earnings growth.
Economic data due this week include chain-store sales for last week, gross domestic project data for the third quarter, November home sales, November durable goods orders and initial jobless claims for last week.