Earnings Previews: Darden Restaurants, Fortuna Silver, Hello Group, Trip.com

The Dow Jones industrials were outpacing the S&P 500 and Nasdaq Composite indexes just after Tuesday’s opening bell, largely due to a solid earnings report last night from Nike. Year over year, revenue rose by 4.8%, and earnings per share (EPS) beat estimates by nearly 21%. The company also said that its business in China (which had been poor) was improving, and Nike expects the improvement to continue in the current quarter. The stock traded up more than 5%.

The other side of the earnings coin is represented by Tencent Music, which missed both EPS and revenue expectations and traded down by around 8% in the early going Tuesday. Carnival Cruise Lines also missed on both but traded up by less than 1%, and Huya, the China-based streaming games platform, traded down about 6% after posting a smaller-than-expected loss on a year-over-year drop in revenue of about 6%.

After markets close Tuesday and before they open again on Wednesday, reports are due from these five firms, among others: Adobe, General Mills, JinkoSolar, PagSeguro and Winnebago.

Here we preview four companies set to report quarterly later on Wednesday or first thing Thursday morning.

Darden Restaurants

Darden Restaurants Inc. (NYSE: DRI), the owner and operator of more than 1,800 restaurant locations, including Olive Garden and  Longhorn Steakhouse, will report fiscal third-quarter results before Thursday’s opening bell. Over the past 12 months, Darden’s stock has dropped by about 1.4%, following a dip of 19% in the first week of this month. For the month of March to date, Darden stock is down about 7.6%. It seems that investors are not yet convinced that Darden has a handle on rising costs in the current economic environment.

Of 29 analysts covering the stock, 19 have a Buy or Strong Buy rating on the shares and another nine rate the stock at Hold. At a recent price of around $134.50 a share, the upside potential based on a median price target of $162.50 is 20.8%. At the high price target of $180, the upside potential is 33.8%.

Third-quarter revenue is forecast at $2.51 billion, which would up 10.6% sequentially and about 45% year over year. Adjusted EPS are forecast at $2.11, up 42.6% sequentially and 115% higher year over year. For the full fiscal 2022 year ending in May, current estimates call for EPS of $7.53, up 74.7%, on sales of $9.30 billion, up 33.4%.

Darden stock trades at 17.8 times expected 2022 EPS, 15.9 times estimated 2023 earnings of $8.42 and 14.3 times estimated 2024 earnings of $9.34 per share. The stock’s 52-week range is $116.03 to $164.28. Darden pays an annual dividend of $3.45 (yield of 3.29%). Total shareholder return for the past year was 0.6%.

Fortuna Silver

Over the past two years, shares of Fortuna Silver Mines Inc. (NYSE: FSM) have risen by about 64%. Since reaching an all-time high of around $9.70 in January of 2021, however, the shares fell to a recent low of below $3 a share. The better news is that the stock has added about 34% since posting that low. It is all down to demand for precious metals. Silver futures have added more than 13% since mid-December, a better return than the increase of about 8.5% in gold. Vancouver, B.C.-based Fortuna has silver and gold projects in Mexico, Peru and Argentina. The company will report quarterly results after markets close Wednesday.

Broker coverage is light, with just seven firms covering the stock. Three have a Buy or Strong Buy rating on the shares and the rest have Hold ratings. At a share price of around $4.10, the stock trades just above its median and price target of $4.00.

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