NKE, GIS, PAYX, WBA: Earnings Preview

By Duncan Ferris

Jun 24, 2022

Our examination of this week's earnings takes a peek at Nike (NYSE: NKE), General Mills (NYSE: GIS), Paychex (NASDAQ: PAYX) and Walgreens Boots Alliance (NASDAQ: WBA).

68ed60c1fa6a428f947b3272598932c4_nike_russia_01721

Earnings Preview

As inflation fears continue to swirl and stock market chaos continues to reign, we're looking at some of the key earnings updates from the week ahead.

Here are the reports we have marked out for the coming days:

Nike (NYSE: NKE)

This giant of fashion and fitness has seen its shares drop by more than 30% across the year to date. The coming week could herald further bad news for Nike, with analyst consensus pointing to an almost 20% reduction in quarterly earnings per share, though revenue is still seen as creeping up by over 2%

One of the big issues harming the sportswear giant's fortunes right now is all the way over in China. Nike has several stores and operations in the country, as well as a headquarters in Shanghai, and continued Covid-19 disruption has caused store closures and supply chain difficulties.

That being said, sales continued to grow in the company's third quarter, with 5% revenue growth following impressive direct and online sales performance in the period.

Demand appears to be strong for the company's products, and, should this continue into the fourth quarter alongside better-than-expected earnings, we could see a share price bounce back from what is one of the planet's most well-known brands.

Expect to hear from Nike about its fourth earnings after the close of trading on Monday.

General Mills (NYSE: GIS)

It's worth noting that this company's share price has fared better than most in 2022, having actually risen by a modest 2.6% since the turn of the new year.

Its status as a member of the consumer staples sector has undoubtedly helped here, as these companies often hold up well in times of financial hardship. But has something more been keeping General Mills buoyant?

The short answer is yes, but that's not necessarily a reason to throw your lot in with the company.  

On the one hand, the company claimed in its third quarter earnings that factors such as working from home, increased interest in cooking and baking, and rising pet populations would stimulate demand for its products in the coming months. Consequently, General Mills raised its full-year guidance in the update.

However, the potential for higher pricing in response to inflation and dividend obligations could cut into the business' fortunes. Look out for margin pressures and earnings growth in this week's update.

Watch out for General Mills' fourth quarter earnings on Wednesday this week.

Paychex (NASDAQ: PAYX)

Also releasing its next quarterly update on Wednesday is Paychex, specialists in outsourcing of human resources, payroll, and benefits services.

The previous quarter saw both of the company's segments racking up double-digit revenue growth. Management Solutions revenue climbed by 13% as the business enjoyed an increase in client bases for its human capital management offerings, while Professional Employer Organization revenue rose by 21% as employee numbers and wages increased.

This sounds rosy, but there are a number of key things to keep in mind when considering Paychex stock. The company relies on its broad customer base for its growing revenue, and if this starts to shrink, it will spell trouble. As such, it's key for the company to retain and grow its market share and that employment rates do not significantly shrink.

That being said, April saw the company hike its dividend by 20%, so its leadership is clearly confident that the business can continue to succeed.

Walgreens Boots Alliance (NASDAQ: WBA)

This holding company, which owns pharmacy chains Walgreens and Boots, is expected to report a downturn in earnings this week.

Consensus estimates from Zacks Investment Research show anticipation that Walgreens Boots Alliance's earnings per share will register a decline of almost 40% year over year to reach $0.95. Additionally, revenues are expected to drop by around 4% to $32.7bn. 

These would also represent declines in the company's second quarter performance, which was itself slightly behind expectations. If the business confounds the expectations of declines in this department, it seems likely that there will be at least a short term jump in share price.

Also worth looking out for is any news regarding the company's attempts to offload UK pharmacy chain Boots.

Apollo and Reliance Industries has been named by media outlets such as Sky News as the only significant bidder for the chain, though it is reported that it will have to rely on the support of lenders such as Royal Bank of Canada, Credit Suisse, Santander, and Bank of America to finance a £5bn deal. 

The company's next update is set to be released on Thursday morning.

Important Notice And Disclaimer

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.