Earnings Previews: Albertsons, State Street

Before markets opened Thursday morning, five of the country’s largest banks, the largest drugstore chain and the world’s largest chipmaker all reported September-quarter results. All but one traded higher, thanks to better-than-expected revenue and profits, and, in one case, raised guidance for the fourth quarter.

We already have previewed earnings reports from companies reporting after markets close Thursday and before they open on Friday: Alcoa, Charles Schwab, Goldman Sachs and Truist.

No reports are scheduled for release after markets close Friday, and just two of note expected before markets open Monday.

Albertsons

Shares of grocery store operator Albertsons Companies Inc. (NYSE: ACI) have risen more than 95% over the past 12 months. That’s more than five times better than Kroger’s share price gain in the same period. Since a recent low at both chains in early July, Albertsons stock has increased by more than 80% while Kroger shares are up about 20%. Much of the gain is related to rising food prices, but Albertsons also hammered estimates when it reported fiscal first-quarter results in June.

Sentiment among analysts is mixed, with nine of 19 ratings either a Buy or Strong Buy, while another eight ratings have the stock as a Hold. At a recent price of around $27.60, the upside potential based on a median price target of $30 is about 8.7%. At the high price target of $36, the upside potential is 30%.

For the second quarter of fiscal 2022, analysts forecast revenue of $15.85 billion, which would be down about 25% sequentially and up less than 1% year over year. Adjusted earnings per share (EPS) are forecast at $0.45, down 49% sequentially and 25% year over year. For the full fiscal year, current estimates call for revenue of $67.9 billion, down about 2.6%, and EPS of $2.33, almost 28% lower.

Albertsons stock trades at 11.6 times expected 2022 EPS, 11.7 times estimated 2023 earnings and 11.3 times estimated 2024 earnings. The stock’s 52-week range is $13.90 to $34.09, and Albertsons pays an annual dividend of $0.40 (yield of 1.48%).

State Street

Asset manager State Street Corp. (NYSE: STT), the issuer of the SPDR family of exchange-traded funds, has added nearly 40% to its share price over the past 12 months, slightly better than the 39% share price gain posted by BlackRock, the world’s largest asset management firm, but less than half KKR’s share price gain over the same period. State Street recently acquired a global asset servicing company and data management platform Mercatus as the firm seeks growth by widening its scope.

Of 17 analysts covering the firm, 10 rate the stock a Buy or Strong Buy, and six have Hold ratings. At a price of around $90.50, the upside potential based on a median price target of $102.50 is 3.3%. At the high price target of $122, the upside potential is nearly 35%.

For fiscal 2021’s third quarter, the consensus estimate calls for revenue of $2.96 billion, down 2.3% sequentially and up about 6.5% year over year. Adjusted EPS are forecast at $1.92, down 2.6% sequentially and up 32.4% year over year. For the full fiscal year, State Street currently is expected to report EPS of $7.29, up 8.9%, on revenue of $11.93 billion, up almost 2%.

Shares trade at 12.4 times expected 2021 EPS, 10.9 times estimated 2022 earnings and 9.2 times estimated 2023 earnings. State Street’s 52-week range is $57.16 to $94.64, and the firm pays an annual dividend of $2.28 (yield of 2.54%).

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