NKE, ADBE, GIS, DIR, NIO: Weekly Earnings Preview

By Duncan Ferris

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Here, we preview our pick of this week's earnings, which include Nike (NYSE: NKE), Adobe (NASDAQ: ADBE) and General Mills (NYSE: GIS).

With the Fed finally having hiked interest rates, many investors will be keen to monitor earnings releases as they wait to see if stocks can bounce back.

Some key earnings we have picked out to have an advanced look at are Nike (NYSE: NKE), Adobe (NASDAQ: ADBE), General Mills (NYSE: GIS), Darden Restaurants (NYSE: DIR) and Nio Inc (NYSE: NIO).

Nike (NYSE: NKE)

Nike is presenting its earnings against a tough backdrop, with consumer confidence dropping and the company having to pull the plug on its operations in Russia, this is an earnings report to watch.

Investors might want to keep their eye on the company’s guidance and any offered commentary on supply chain issues. Indeed, the company’s second quarter results reported supply chain challenges in the region, and these could have worsened.

That’s because COVID-19 has reared its head in East Asian nations like China, where local restrictions could lead to lockdowns in areas where Nike and its suppliers have factories.

Additionally, Nike could face further issues depending on the future of Chinese relations with Russia, where the company has already shut down more than 100 stores due to the invasion of Ukraine. As such, investors would do well to monitor any information about Nike’s business in China.

The company’s share price has fallen by more than 20% across the year to date, dropping back, like so many companies, from a high in early November 2021. The sportswear specialist will release its third quarter earnings after the close of trading on Monday.

Adobe (NASDAQ: ADBE)

The company that made PhotoShop famous has had its share price dragged downwards by the wider tech selloff since the start of 2022.

According to Zacks Investment Research, consensus estimates peg the company’s expected EPS for the quarter at $3.34, while Adobe forecasted that its first quarter revenue will come in at around $4.23bn. This fell short of expectations at the time of the release, sending the company’s stock down by around 10% on a single day in December 2021.

A key factor that has sent tech stocks like Adobe downwards has been concern about inflation and interest rates. With stocks having climbed after the Fed finally confirmed an interest rate hike last week, a strong earnings update from Adobe could lead to healthy gains.

Adobe will release its earnings on Tuesday evening.

General Mills (NYSE: GIS)

The consumer staples giant, which is responsible for a wide array of cereals such as Cheerios, Cookie Crisp and Golden Grahams, backed itself to meet its full year 2022 guidance in an earnings update in February.

However, the business warned that its second half earnings were on course to be more heavily weighted to the fourth quarter than previously expected. It explained that this was due to supply shortages on its refrigerated dough, pizza, and hot snacks platforms in North America.

As such, organic net sales growth is expected to be constricted to 2 or 3%, while constant-currency adjusted operating profit has been estimated to drop by high single digits to low double digits versus the same period last year.

This was not a positive forecast, but if General Mills’ warnings turn out to be overly cautious, the company’s share price could climb. Investors will have to wait until Wednesday morning to get their hands on General Mills’ earnings report.

Darden Restaurants (NYSE: DRI)

Darden, which counts Olive Garden among its multiple restaurant brands, is set to release its third quarter earnings before the market opens on Thursday.

Projections from FactSet show the company’s EPS coming in at $2.11 and its revenue standing at $2.52bn for the three-month period. There are a number of key things beyond the numbers to look out for in this update.

While the company might be benefitting from loosening COVID protocols, inflation in food costs and staff shortages are threats to look out for. This latter issue is one which investors might want to focus on, given the company’s commitment to hiking staff wages in order to keep employee numbers stable.

On Darden’s second quarter earnings call, CEO Gene Lee commented:

“The way we think about it is that there may not be enough service workers and the staff every restaurant in America, but there's enough service work is out there to staff Darden's restaurants and that's what we're focused on”.

Nio Inc (NYSE: NIO)

Chinese EV maker Nio appears to be performing strongly if you just look at the surface level, with a March update from the company showing that vehicle deliveries were up by almost 10% in February and by more than 20% across the year to date.

Add that to expectations of a revenue increase of approximately 41.2% to 52.2% from the same quarter 12 months prior, and the update sounds exciting for investors.

The troubling backdrop to this earnings release cannot be ignored though. Nio currently faces the risk of being de-listed from the NYSE as US and Chinese regulators are both seeking to crack down on Chinese companies with foreign listings.

With tensions on a knife edge between the two superpowers amid their opposing views of how to handle the conflict between Russia and Ukraine, Nio’s shares could be on the way out regardless of how the company’s earnings shape up. 

Nio itself appears to be trying to sidestep this risk, having listed its stock on the Hong Kong stock exchange earlier this month. Investors can expect Nio’s earnings to be released on Thursday evening.

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Companies:
Nike
Adobe
General Mills
Darden Restaurants
Nio

Author: Duncan Ferris

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.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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