Earnings season is slowing down. That doesn't mean there aren't still stocks to watch.
Here are the names I'm watching this week.
Tilray (March 18)
We'll get to see how earnings actually stack up to what I consider to be an excessively overvalued equity.
Cannabis company Tilray, Inc. (TLRY) reported sales of $10.05 million in September, with losses on that revenue of $18.7 million. Now obviously this is a growth company in a growth industry, but $72 a share seems a bit excessive considering the plethora of competitors, and lack of profits.
Indeed, the upcoming earnings release will need to prove that Tilray can create revenue growth big enough to convince the markets that its earnings could someday justify this very expensive stock.
My worry here is the same worry I've had with most medical/recreational marijuana stocks. Almost every single one of them has already priced in a great deal of the future earnings potential.
I have shares in Aphria Inc. (APHA) , which I've traded a few times. I always try to wait for a dip to acquire, as these sorts of stocks trade at big multiples. Aphria has had profitable quarters. Tilray hasn't. This quarter is a heavy test for Tilray because of the stock pricing.
Analysts think the company will have about $14 million in revenue for the quarter. Sequentially, that would be a nice 40% gain. My concern is that most producers have reported revenue gains without the earnings to match. Tilray's stock price is so high that the shares could be hit especially hard by net losses.
FedEx (March 19)
FedEx Corp. (FDX) is one of those companies that has always seemed to do well, even when its earnings aren't what you might have hoped for.
Through the past five fiscal years, we've seen strong annual growth in revenue from this shipping giant. Excluding unpredictable retirement account adjustments, FedEx expects earnings per share of $12.65 to $13.40 for the full year. This was the guidance provided at the end of the company's fiscal second quarter 2019.
That marked around a $3 decrease from the company's previous forecasting.
Going off of those figures, FedEx is trading at roughly 13.35x the high end of that forward guidance range. I'm not sure that this earnings release will hold as much grip on FedEx as the developing story around Amazon.com, Inc. (AMZN) working to compete against names like FedEx and United Parcel Service, Inc. (UPS) .
The online giant has been acquiring lots of vans and has orders for a lot of cargo planes underway. I worry with FedEx that all of the benefits they've enjoyed from the rise of Amazon's shipping needs might start to fizzle a bit.
Micron Technology (March 20)
It's already been relatively accepted that Micron Technology, Inc. (MU) will likely post a fairly substantial year-over-year decline in its earnings this week.
This is, for all intents and purposes, related to weaker pricing for its chips due to supply and demand. If analysts are correct in their estimates of $1.69 in earnings, that's a big dip year over year.
My take on the earnings report is this: If Micron can match estimates or beat them, the stock will be OK. Since July, much of the hurt has already been put into the stock. Full year estimates have the company reporting earnings of around $7.35 per share.
That would mean the stock is trading at roughly 5.36x forward full-year earnings. That's pretty darn cheap. However, when you consider views that the following fiscal year will not improve, but actually decline further to $6.22, the story remains complicated.
Personally, I don't expect much in this quarter. Micron's story is on a longer timeline. This week's earnings might move the stock, but it I don't see anything major. The market has already adjusted for expectations.
I could be wrong, but I don't see a lot of downside this week unless Micron provides some sort of lowered guidance for the rest of the year that comes in below forecasts.