Earnings This Week: Tilray, Tesco and Wetherspoons

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Josh Warner
By :  ,  Market Analyst

Corporate earnings calendar: October 3-7

The corporate calendar remains quiet ahead of earnings season kicking off next month. Alcohol giant Constellation Brands and jeans maker Levi Strauss both report on Thursday, when food stocks will also be under the spotlight with earnings out from spice maker McCormick & Co and packaged food company ConAgra Brands. Cannabis company Tilray reports on Friday.

The UK calendar is also slim this week, headlined by interim results out from the country’s largest supermarket chain Tesco and one of its largest pub chains JD Wetherspoon.

Monday October 3

James Halstead FY

Tuesday October 4

Acuity Brands Q4

Wednesday October 5

Tesco H1

Thursday October 6

Constellation Brands Q2

McCormick & Co Q2

ConAgra Brands Q1

Levi Strauss Q3

Friday October 7

Tilray Q3

JD Wetherspoon FY

 

Tesco

Tesco, the largest supermarket chain in the UK, is determined to keep prices low to maintain its sharper focus on value as consumers struggle with the cost-of-living crisis, although this will weigh on margins. Analysts forecast Tesco will report a 5.2% rise in revenue to £31.98 billion in the first half and an 11.9% drop in adjusted pretax profit to £1.00 billion as a result. The intense focus on price is vital considering discounters Aldi and Lidl are the fastest-growing rivals, with the former recently becoming the fourth largest supermarket after overtaking Morrisons. Tesco is aiming to deliver an adjusted retail operating profit – its headline measure – of £2.4 billion to £2.6 billion over the full year and retail free cashflow of £1.4 billion to £1.8 billion. However, it has warned the outlook depends on how shopping habits shift in response to rampant inflation, its ability to deal with rising costs and the amount it must spend on keeping prices low.

 

Constellation Brands

Vice stocks can hold up well when the economy falters and we could see evidence of this when alcoholic beverage giant Constellation Brands reports this week. Wall Street forecasts revenue will rise 5.6% to $2.50 billion in the second quarter, with its diluted EPS attributable to the company to jump 18% to $2.82. Its beers are expected to drive topline growth with sales forecast to grow 8%, driven by its Modelo and Corona brands, although that will be far slower than the double-digit growth seen in recent quarters. That will counter a 2.3% decline in sales of wines and spirits, although both divisions will report higher profits thanks to weak comparatives from last year. The company is aiming to deliver $11.20 to $11.50 in annual comparable EPS (versus $10.99 last year) after upgrading its outlook after a strong start to the new financial year and a reiteration would be a welcome sign that this alcohol maker can deliver in a tough environment. Notably, its target price has barely nudged down in recent months when most stocks have had theirs reduced.

 

McCormick & Co

Spice maker McCormick & Co has taken the element of surprise out of the upcoming third quarter results after issuing an update earlier this month, when it admitted it missed expectations and lowered its guidance for the full year as slower demand, higher costs, the strong US dollar and the divesture of its Kitchen Basics business all weigh on its results. It said sales will be up around 3% in the quarter and that adjusted EPS will fall to $0.65 from $0.80 the year before. It now expects sales to move 0% to 2% higher over the full year and for adjusted EPS to come in at $2.63 to $2.68, down from the $3.05 delivered last year.

 

ConAgra Brands

ConAgra Brands is set to continue growing when it releases first quarter results this week. The company has been protecting itself from higher costs by passing them onto consumers and has already warned that it plans to keep on raising prices in the inflationary environment. Wall Street forecasts revenue will rise 6.9% in the first quarter of its new financial year to $2.84 billion and that adjusted EPS will increase 4.3% to $0.52. It is aiming to deliver organic net sales growth of 4% to 5% in the new year, with adjusted EPS to rise 1% to 5% - with that wide range leaving potential for it to be tightened. This will be the easiest quarter in terms of comparatives and a further price hike coming into effect in the second quarter will further test demand as consumers become more cost-conscious.

 

Tilray

Cannabis company Tilray is benefiting from its diversification into beverages in what is proving to be a challenging time for the marijuana industry. Wall Street forecasts revenue will fall 6.1% in the first quarter of the new financial year to $157.8 million and that adjusted Ebitda – its headline measure – will rise 9.5% to $13.9 million, marking its 14th consecutive quarter of profit at this level even if it remains in the red at the bottom-line. Its newer and smaller alcohol arm is providing growth at a time when the core marijuana business is under pressure, helping Tilray achieve its profit goals. Tilray is aiming to deliver $70 to $80 million of adjusted Ebitda (up from $48 million the year before) and deliver positive free cashflow for the first time this year. Brokers remain bullish after the selloff this year with an average target price of $4.56, although the most recent downgrades have slapped a target of as low as $2.00.

 

JD Wetherspoon

Pub chain and UK high street staple Wetherspoons is forecast to double its annual revenue to £1.69 billion from £777.3 million when it reports this week, with like-for-like sales expected to jump 86.7%. thanks to weak comparatives from last year when Covid-19 was still in play. However, guidance has already been downgraded once with like-for-like sales for the first 11 weeks of the quarter down 0.4% on last year. That paints a tougher picture going forward and the outlook could be at risk due to the increased fears over the cost-of-living crisis, rising energy bills and other commercial costs. While forecasts remain positive, Wetherspoons shares have fallen over 57% since the start of the year and currently trade at their lowest level in over a decade.

 

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