Earnings Previews: Berkshire Hathaway, Workhorse, Stratasys

All three major indexes traded down late Thursday morning, with the tech-heavy Nasdaq down the most with a dip of 1%. Again, the tech sector weighed on all the indexes. NetApp and two chipmakers, Skyworks and Nvidia, were among the biggest losers. Boeing and Dow were the big losers among the Dow Jones industrials.

In our earnings preview Wednesday, we looked at Airbnb, Fisker, Nikola and Salesforce, all scheduled to report results after markets close Thursday, as well as Cinemark, Cronos and DraftKings, all scheduled to report earnings before markets open Friday.

As typical for a Friday afternoon, no results of note are expected, but Monday morning brings reports from three top firms.

Berkshire Hathaway

Berkshire Hathaway Inc. (NYSE: BRK-B) is one American company that is in a league of its own. It behaves more like a hedge fund and trades like a stock. That’s not the only unique thing about Warren Buffett’s colossus. Berkshire Hathaway isn’t really reporting results on Monday.

The company releases its annual letter to shareholders on Saturday and the anticipation is palpable. Buffett has mostly remained silent during the pandemic about subjects from politics to the economy. However, Buffett’s business partner and the vice chair of Berkshire Hathaway, Charlie Munger, on Wednesday took a few potshots at Robinhood, SPACs and bitcoin.

In 2019, the company posted revenue of about $256 billion and an operating profit of $105.5 billion. Per-share earnings amounted to $9.78, mostly from the company’s insurance business. The share price appreciated about 2.4% last year, far below the 16.3% gain of the S&P 500.

Berkshire Hathaway recently released the changes the firm made to its portfolio in the fourth quarter. Buffett sold about $1.1 billion worth of Apple stock in the quarter but continues to own some $118 billion in the company’s shares (nearly 44% of Berkshire Hathaway’s entire portfolio).

Workhorse

Before the markets open on Monday, Workhorse Group Inc. (NASDAQ: WKHS) is expected to report its fourth-quarter results. The maker of electric delivery vans made news earlier this week when it did not receive the contract to replace the U.S. Postal Service’s delivery trucks. The stock price dropped by more than 50% in one day.

The company’s stock had never traded above $10 since its 2010 initial public offering. Then in June of last year, shares shot up, and they reached an all-time high of nearly $43 earlier this month. Even including Tuesday’s 55% plunge, Workhorse’s stock is up about 340% over the past 12 months.

Analysts are looking for net losses per share of $0.13 for the quarter and $2.25 for the full year. Revenue for the quarter is estimated at $1.3 million, with an estimated $2 billion in full-year revenue. Workhorse is not expected to post a profit in either 2021 or 2022.

Stratasys

3D printer maker Stratasys Ltd. (NASDAQ: SSYS) traded at more than $135 a share in its salad days of 2013. In September of last year, the share price had dipped to around $12. Their upward climb began in late November and peaked at around $55 a share earlier this month. Cathie Wood’s popular Ark Innovation ETF (NYSEARCA: ARKK) includes the stock in its portfolio, and that has given the shares a boost as well.

Analysts currently estimate fiscal 2020 fourth-quarter earnings to be flat on revenue of $135 million. These estimates represent a year-over-year decline of 18 cents in EPS and nearly 16% in revenue. When the company released third-quarter results, the chief financial officer said the company expected sequential revenue growth of around 5% to 7%, and $135 million is slightly above the top of that range.

For the full year, the loss per share is forecast to come in at $0.38, down from EPS of $0.56 in the prior year, and revenue is tabbed to come in at $514 million, a decrease of more than 19%.

Shares traded Thursday mostly above $35, compared to the consensus price target of $22.60. Using the high price target of $40, the potential upside on the shares is around 10%.

At the current trading price, the stock trades at around 78 times expected fiscal 2022 EPS. The company is not expected to post a profit in 2020 or 2021.

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