Earnings This Week: Wizz Air, GameStop and NIO

Earnings calendar: June 5 - 9

The US earnings season is tapering off and things will be quiet this week. Keep an eye on plumbing and heating specialist Ferguson, video game retailer and meme stock favourite GameStop, online travel agent Trip.com, e-signature firm DocuSign, casino operator Vail Resorts, distillery Brown-Forman, and food makers JM Smucker and Campbell Soup.

There will also be results out from Chinese electric vehicle maker NIO.

The UK calendar is headlined by updates out from airline Wizz Air, investment manager M&G, facilities manager Mitie Group, public transport operator First Group and housebuilder Crest Nicholson.

Below is a calendar outlining all the key earnings we are watching this week:

Ferguson stock: Q3 earnings preview

Ferguson is suffering a slowdown in demand while profitability is also under pressure in the inflationary environment. Ferguson is forecast to report a 2.2% year-on-year drop in revenue to $7.13 billion. That will mark the first topline decline in over two years! That will be the result of deteriorating conditions in Canada and softer demand in the US. The weakness is being driven by the residential market, where a slowdown in the number of new homes being built has hit demand and only partly countered by more resilient demand for repairs and non-residential work. Quarterly adjusted EPS is expected to suffer its second consecutive fall, this time by 10.5% to $2.24. Watch the outlook. Ferguson has said it is aiming to grow revenue by a low single-digit percentage over the full year but has warned its adjusted operating margin will contract to 9.3% to 9.9% from the 10.7% reported in the last financial year. While that isn’t inspiring, Ferguson has said it would outperform rivals if it can deliver this outlook. Consensus figures currently predict 2.9% annual sales growth and a margin of 9.5%.

GameStop stock: Q1 earnings preview

Things remain challenging for video game retailer GameStop. Management continue to quietly try and get the company back on track and delivered a rare quarter of profit when it last released results, but markets remain doubtful over its prospects considering Wall Street believes GameStop will continue to see sales decline and remain in the red for years to come! With that in mind, analysts forecast revenue will fall for a fourth consecutive quarter, this time by 2.7% to $1.34 billion. Its net loss is expected to narrow to $45.2 million. There are some green shoots. Hardware sales have returned to growth and its small collectibles unit continues to expand, albeit at a slower pace, helping counter softer demand for games. Losses are narrowing, and GameStop has now largely completed upgrading its infrastructure, distribution and digital platforms to position it well to move forward with a focus on ‘efficiency, profitability and pragmatic growth’ – now all it needs to do is convince the markets through execution. GameStop is up over 40% since the start of 2023, although brokers believe this has been overdone and that the meme stock favourite is still heavily overvalued considering the average target price currently sits at just $13.25.

DocuSign stock: Q1 earnings preview

DocuSign, which emerged as a pandemic winner as consumers and businesses shifted to online tools, has seen its share price struggle since the value earned back in 2020 and 2021 unravelled as the global economy reopened. Revenue growth has now been slowing down for two years! Sales are forecast to rise 9.1% from last year to $642 million and that will mark the slowest pace on record since it went public back in 2018. Subscriptions for its tools like its flagship e-signature software continues to grow, with a drop in demand from businesses having unwound more over the last year. Billings are forecast to rise just 1.3% to $621.9 million. DocuSign is proving successful at retaining customers but needs to assure investors of its prospects as growth slows to more normalised levels compared to what they became accustomed to during the pandemic. However, adjusted EPS is expected to jump 43.6% to $0.55 as its bottom-line benefits from easier comparatives, which should continue in the coming quarters. Notably, DocuSign’s new chief financial officer Blake Grayson will takeover from Cynthia Gaylor after the first quarter results.

NIO stock: Q1 earnings preview

We already know that NIO delivered 31,041 vehicles in the first quarter, over 20% more than what it shipped the year before but at the bottom-end of its guidance range and shy of estimates. The result is expected to be a 17.8% year-on-year rise in revenue to RMB11,679 million and its adjusted loss per share is expected to widen to RMB2.66. It is concerning that deliveries have fallen in April and May compared to what we saw in the first quarter, which will prompt concerns about the ramp-up. That will place the onus on its outlook for the second quarter. Wall Street anticipates NIO can deliver over 49,600 cars in the period but it has so far delivered just 12,813 in the first two months – leaving it with an almighty task of shipping over 36,700 vehicles in June if it wants to meet expectations! The new ES6 was launched in May and the new ET5 Touring will follow this month, providing new models that could supply some much-needed momentum to sales. Its vehicle margin should recover to 9.5% in the first quarter, which will still be lower than the year before but up from the trough we saw at just 6.8% in the fourth quarter of 2022, which should help install confidence that margin headwinds have peaked and that profitability is on an upward trajectory once again.

Wizz Air share price: FY earnings preview

The airline industry is still bouncing back as demand for travel continues its long recovery after being decimated by Covid-19. Passenger numbers continue to rise each month, having surpassed 5 million alone in May. This recovery means Wizz Air is forecast to report annual revenue of EUR3.91 billion, more than double what was achieved the year before. However, investors are more concerned with how Wizz Air is progressing with profitability and its ability to get out of the red. Adjusted Ebitda is expected to come in at EUR185.9 million and turn from last year’s losses, but markets believe it will still be loss-making at the bottom-line. Still, this should be a turning point considering Wizz Air is set to return to profit in the new financial year as revenue continues to climb thanks to increased demand as well as higher fares, while cost pressures ease. Improving load factors, which returned to above 90% in May, bode well for efficiency and Wizz Air has said utilisation levels should return to pre-pandemic levels this summer.