Earnings Week Ahead: Lennar, Adobe, FedEx, Darden Restaurants and Fed’s Policy in Focus
Although next week’s earnings are unlikely to have much of an effect on major market movements, it is sufficient to gauge investors’ sentiment. The main event on the market will be the Fed’s policy announcement on Wednesday. After the central bank’s policy-making arm concludes its two-day meeting, all eyes will be on Jerome Powell, the Fed’s chairman, who will hold a press conference.
- Monday (December 13)
- Tuesday (December 14)
- Wednesday (December 15)
- Thursday (December 16)
- Friday (December 17)
Monday (December 13)
Tuesday (December 14)
Wednesday (December 15)
IN THE SPOTLIGHT: LENNAR, FEDERAL RESERVE POLICY DECISION
LENNAR: The home construction and real estate company, is expected to report earnings per share of $4.15 in the fiscal fourth quarter, which represents year-over-year growth of over 46% from $2.83 per share seen in the same period a year ago.
The Miami, Florida-based company would post year-over-year revenue growth of more than 25% to around $8.5 billion. For four quarters in a row, the company has exceeded expectations on earnings per share.
In the fourth-quarter fiscal 2021, Lennar expects to build 18000 homes with a gross margin of 28%, according to Zacks research. The number of new orders is expected to range from 15,200 to 15,400 units, while the average selling price is forecast to be $445,000. As a percentage of home sales, SG&A expenses are likely to be 6.7%.
In a note to clients, Goldman Sachs analysts raised her price target for Lennar to $140 from $108 and upgraded it from neutral and buy to buy.
FOMC: On Wednesday, the Fed will likely announce an acceleration of its bond-buying program. Fed’s decision may also be influenced by consumer price inflation data, which hit nearly 40 years high in November.
“The concern at the Fed will be that high inflation today can fuel expectations of higher inflation tomorrow and the day after that and so on. This can then feed through into wage demands and in an environment of decent corporate pricing power we see those costs post onto customers,” noted James Knightley, Chief International Economist at ING.
“The Fed will be keen to avoid this (or be seen willing to tolerate it), hence our expectations for a faster taper next week, with the programme concluding in February. We also expect them to signal the prospect of two rate hikes in their “dot plot”, up from the one they currently have.”
Thursday (December 16)
IN THE SPOTLIGHT: ADOBE, FEDEX
ADOBE: The U.S. multinational computer software company is expected to report its fiscal fourth-quarter earnings of $3.20 per share, which represents year-over-year growth of about 14% from $2.81 per share seen in the same period a year ago.
The San Jose, California-based software company would post year-over-year revenue growth of over 19% to $4.09 billion. In the last two years, the company has beaten earnings per share (EPS) estimates almost all the time.
“Heading into FY22 we favour core franchises at reasonable valuation levels, like Adobe. We see improving DX growth, more so than DM, to pave the route to sustained ~20% growth. The initial FY22 guide likely proves conservative, but establishes a base from which ADBE can grind higher,” noted Keith Weiss, equity analyst at Morgan Stanley.
FEDEX: The Memphis, Tennessee-based multinational delivery services company is expected to report its fiscal second-quarter earnings of $4.24 per share, which represents a year-over-year decline of over 12% from $4.83 per share seen in the same period a year ago.
The delivery firm would post revenue growth of about 9% to 22.41 billion up from $20.6 billion seen a year ago. In the last four quarters, the company has beaten earnings per share estimates (EPS) only twice.
“After several negative catalysts in the Parcel space, momentum has (modestly) reversed in recent weeks. The question is can FedEx’s (FDX) print continue to build momentum or will we return to our prior pattern of disappointing updates? We believe consensus & guidance are still too optimistic,” noted Ravi Shanker, equity analyst at Morgan Stanley.
“We expect F2Q22 to come in below consensus. We are also below cons. for overall EBIT driven by misses in Ground and Express which are only partially offset by a beat in Freight. All in, we continue to believe the FY22 guidance cut from last quarter was not enough and see risk to F2Q and FY22 numbers as pandemic tailwinds die down.”
Friday (December 17)
IN THE SPOTLIGHT: DARDEN RESTAURANTS
The Orlando-based restaurant operator, Darden Restaurants, is expected to report its fiscal second-quarter earnings of $1.44 per share, which represents year-over-year growth of about 95%, up from $0.74 per share seen in the same period a year ago.
The multi-brand restaurant operator would post year-over-year revenue growth of nearly 35% to $2.2 2 billion. In the last two years, the company has beaten earnings per share (EPS) estimates all the time.