GameStop (GME) Stock Remains “Dangerous” Ahead of Earnings | Kiplinger

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Our preview of the upcoming week’s earnings reports include GameStop (GME), Lennar (LEN) and FedEx (FDX).We’ve reached the tail end of earnings season, but there are a few more names likely to draw attention over the next few weeks. One of the headliner’s on this week’s earnings calendar is original meme stock GameStop (GME, $96.59).

The video game retailer is scheduled to report its fourth-quarter results after the March 17 close. 

GME stock fell 10.3% the day after it reported earnings in December, with the company reporting a third-quarter loss that was wider than the year prior. Another negative earnings reaction will only exacerbate its long-term downtrend, with shares off more than 62% in the last 12 months.

Even with this significant decline in GME’s share price, it “remains a dangerous stock,” says David Trainer, CEO of investment research firm New Constructs. This is because GameStop, like many of its fellow meme stocks, “remain dangerously overvalued and don’t generate anywhere near the profits necessary to justify their current valuations.”

This opinion seems to be shared by Wall Street analysts, who carry a consensus Sell recommendation on GME, according to S&P Global Market Intelligence.

As for GameStop’s Q4 earnings report, analysts, on average, are anticipating earnings of 84 cents per share, down 37.3% year-over-year (YoY), and revenue of $2.2 billion – up 4.4% from the year-ago period.

Lennar Expected to Report Sharp Drop in EarningsLennar (LEN, $87.22) stock put in a stellar performance in 2021, posting a total return (price plus dividends) of 53.7% amid a red-hot housing market.

Shares have cooled significantly in 2022, though, with LEN down nearly 25% for the year-to-date amid stiff broad-market headwinds.

Still, analysts are pretty upbeat toward Lennar. Of the 20 analysts following the homebuilder that are tracked by S&P Global Market Intelligence, eight say it’s a Strong Buy and six call it a Buy. This compares to five who believe LEN’s a Hold and one that has it at Strong Sell.

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UBS Global Research analyst John Lovallo is one of those with a Buy rating on Lennar. Improving gross margins for homebuilders, order growth continuing to outpace new home sales, and the company’s proposed spinoff of its non-core businesses are among the reasons Lovolla is bullish on the consumer discretionary stock.

For Lennar’s fiscal first-quarter earnings report – due out after the March 16 close – analysts’ consensus estimates are for a per-share profit of $2.60 (-18.8% YoY) on $6.1 billion revenue, a 15% increase over the year prior.

Analysts See Strong Earnings Growth for FedExFedEx (FDX, $214.52) earnings are often seen as a bellwether, with results from the delivery giant giving Wall Street a glimpse into the trends of the broader economy including consumer spending, e-commerce and supply chains. 

The company will report its fiscal third-quarter earnings report after Thursday’s close. The pros, on average, are looking for $23.4 billion in revenue (+8.8% YoY) and earnings of $4.65 per share, or a 34% improvement over the year-ago figure.

FDX faced both positives and negatives in its fiscal third quarter that will likely lead to “mixed” results, says UBS Research analyst Thomas Wadewitz (Buy).

“On the positive side, we believe FDX likely realized sequential improvement in labor availability in their Ground business and a reduction in the network inefficiency cost relative to the second quarter,” the analyst writes in a note. Still, Wadewitz sees the potential for modestly declining margins in FedEx’s Ground segment due to rising labor costs.

For his part, the analyst sees year-over-year revenue growth of 11.1% and earnings-per-share growth of 28.2% in FDX’s fiscal third quarter.

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