Zoom Video Earnings Expectations High Despite Tough Comps

Zoom Video Communications (ZM, $338.75) has some big shoes to fill following its pandemic-fueled blowout results from Q2 2020, where the video conferencing name posted 355% year-over-year (YoY) revenue growth and a 1,050% surge in earnings per share (EPS).

But analysts are expecting Zoom to unveil another impressive quarter when it reports its second-quarter 2021 results after the Aug. 30 close.

This time around, the pros, on average, are calling for ZM to report revenues of $991 million, which would represent a 49.4% year-over-year (YoY) improvement. And on the bottom line, analysts are expecting $1.16 per share (+26% YoY).

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History certainly suggests ZM will turn in an earnings beat this time around. The company has reported higher-than-anticipated top- and bottom-line results every quarter since its April 2019 initial public offering (IPO).

And Mizuho Americas analysts are upbeat before the big event.

"Heading into second-quarter results we expect Zoom to deliver outsized top-line growth driven by better-than-expected renewals and retention, strong enterprise expansion and average revenue per user (ARPU) growth," the analysts say.

"We believe ZM is positioned favorably for strong share-price appreciation post-Q2 results and maintain our Buy rating and $400 target price."

This bullish outlook is shared by Baird analysts William Power and Charles Erlikh, who "remain buyers" on Zoom Video Communications. They currently have an Outperform rating on ZM, which is the equivalent of a Buy.

"We expect another strong quarter when ZM reports, with the focus on guidance against tough comps," they say. "Our view is that digital transformation tailwinds, coupled with hybrid work, should continue to drive upside to current estimates, perhaps allaying some of the growth concerns. ZM also remains the most profitable software-as-a-service (SaaS) name we follow."

Analysts Lukewarm Ahead of Campbell Soup Earnings

After a hot start to 2021, Campbell Soup (CPB, $41.26) stock has cooled off dramatically, with the shares currently down about 15% for the year to date.

The soup maker will report fiscal fourth-quarter earnings before the Sept. 1 open. On average, analysts are looking for $1.8 billion in quarterly revenue, down 14.3% from the year-ago period, and earnings of 47 cents per share (-25.4% YoY) for the three-month period.

"Approaching fiscal fourth-quarter results, we are attracted to CPB's relatively low valuation, but remain held-back and Hold-rated given a lack of obvious positive catalysts," says Steve Powers, research analyst at Deutsche Bank.

"While we believe FY4Q results should be relatively noncontroversial and in-line with expectations, we continue to see downside risk to Street numbers in fiscal 2022 – anticipating a degree of caution/prudence from management given near-term uncertainties around top-line/food-at-home stickiness, price elasticities and input cost trajectories."

Analysts at Credit Suisse share this tepid outlook, and will also be keeping a close eye on CPB's forward guidance.

"Our sense is that the market already largely anticipates a sharp cut to Campbell's outlook owing to rapidly rising inflation in freight, packaging and logistics," they say. "Campbell planned for significantly higher pricing in fiscal 2022 (perhaps 4%) to offset higher costs, but inflation has moved even higher since then. We estimate calendar year inflation of 8.5% for Campbell in 2022 compared to peers at 8.1%."

The group, which has a Neutral (Hold) rating on the consumer staples stock recently lowered their fiscal 2022 earnings per share estimate to a range of $2.70 to $2.90 per share.

Can Signet Jeweler's Keep Proving the Skeptics Wrong?

Analysts have been fairly skeptical about Signet Jewelers (SIG, $80.00), but the jewelry maker just keeps proving them wrong.

Take SIG'S first-quarter earnings results, which were released in June. The company reported adjusted earnings of $2.23 per share on $1.7 billion in revenues. The pros, meanwhile, were calling for a per-share profit of $1.27 and revenue of $1.6 billion.

As a result, the shares surged 14% in the subsequent session to, what was at that time, their highest point in three years. SIG went on to hit the $81 price point in late June, and was last seen hovering near $80 per share.

By comparison, analysts' average price target for the consumer discretionary stock, according to S&P Global Market Intelligence, is $74.20 – a roughly 7% discount to where it is currently trading. And of the five pros covering the shares, just one says it's a Strong Buy, compared to three Holds and one Sell.

The one Sell rating belongs to CFRA analyst Richard Wolfe. "Despite strong results in the April quarter, illustrated by SIG's upgraded fiscal 2022 guidance and reinstated dividend, uncertainty surrounding consumer spending trends as vaccination efforts ramp and economies reopen keeps us at Sell," Wolfe wrote in a note.

When the Kay Jewelers parent reports its second-quarter results ahead of the Sept. 2 open, analysts, on average, are expecting earnings of $1.62 per share, compared to a pandemic-related per-share loss of $1.13 in the year-ago period. On the top line, the consensus estimate is for $1.6 billion (+80.1% YoY).