Lowe's (LOW): Can Q4 Earnings Embolden Investors?

The busiest stretch of earnings season is behind us, but there are still plenty of notable names left to report. Included on this week's earnings calendar is Lowe's (LOW, $221.45), with the home improvement retailer set to unveil its fourth-quarter results ahead of the Feb. 23 open.

Like much of the broader market, LOW stock has struggled in early 2022. All told, shares are down 14.4% for the year-to-date to trade near levels not seen since late October.

Can LOW's fourth-quarter earnings help the stock reverse course?

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UBS analyst Michael Lasser (Buy) thinks LOW presents a "compelling idea" for investors in 2022. The analyst also believes a key message the company has been able to put forth is that it "is able to drive market share gains in any macro backdrop and has several levers to expand operating margins independent of the sales backdrop."

Truist Securities analyst Scot Ciccarelli also has a Buy rating on LOW stock ahead of earnings. "With existing home inventory levels near historic lows, we expect continued home price appreciation, which should drive further home investment activity," Ciccarelli writes in a note.

He also expects to see gradual margin expansion for Lowe's, given steps management has taken to "shed underperforming assets, upgrade executive talent, invest heavily in technology and revamp multiple major operational processes."

As for LOW's fourth quarter results, analysts, on average, are targeting earnings per share (EPS) of $1.71 – up 28.6% on a year-over-year (YoY) basis – and revenue of $20.9 billion, a 2.8% increase over the year prior.

Plenty of Reasons to Roll the Dice on Caesars, Pros Say

After hitting a new 52-week low near $72 in late January, Caesars Entertainment (CZR, $80.04) shares have rebounded. CZR is up more than 11% since then – and Wall Street pros think there's additional upside in store for one of the top-rated S&P 500 stocks.

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B. Riley analyst David Bain (Buy) has a $191 price target on Caesars Entertainment, implying expected upside of nearly 141% from current levels.

"We calculate a base-case valuation of $191 per share, which combines $143 per share for CZR's Las Vegas and regional brick-and-mortar casino businesses; $41 per share for the digital casino business, which we believe will grow market share significantly faster than peers; and $7 per share for its managed casino business," Bain says.

Jefferies analyst David Katz sees plenty of positive catalysts for CZR too, including "the strength of the Las Vegas Strip, the acceleration in digital gaming and the sale of a Strip asset in the near term."

However, the omicron variant of COVID-19 may have negatively impacted business late in the fourth quarter and early in the first quarter. As such, Katz recently lowered his Q4 revenue outlook for Caesers to $2.6 billion from $2.7 billion. The analyst is also expecting the casino operator to post a quarterly loss of 16 cents per share.

Caesars Entertainment will report its fourth-quarter results after Tuesday's close. The pros, on average, are targeting a 73% year-over-year surge in revenue to $2.6 billion and a per-share loss of 92 cents, much narrower than the $2.67 per-share loss CZR incurred in the year-ago period.

Analysts Keep the Faith on Battered Block

Block (SQ, $98.30) – which changed its name from Square in December – had a rough end to 2021, with the stock shedding nearly 33% in the fourth quarter. Losses have only accelerated in 2022, with shares off more than 39% for the year-to-date, trading below the $100 mark for the first time since June 2020.

Still, Credit Suisse analyst Timothy Chiodo is keeping the faith. "We continue to believe that Block emerges as a larger, faster growth, and more diversified payments and financial services company," he says, particularly in the wake of the Block's acquisition of buy now, pay later firm Afterpay (the deal closed in early February). Chiodo has an Outperform rating on SQ, which is the equivalent of a Buy.

Deutsche Bank analyst Bryan Keane is another Wall Street pro who has a Buy rating on Block. "Given the market sell-off of fintech growth and worries about SQ fundamentals, we believe investor sentiment has turned surprisingly negative on Block’s outlook," the analyst writes in a note.

But in the wake of the Afterpay dea closing and "once SQ can provide some color on Cash App in fiscal 2022, we believe sentiment will quickly turn more positive," he adds. As for SQ's fourth-quarter results, due out after Thursday's close, Keane is anticipating earnings of 17 cents per share.

This is fairly conservative when compared to analysts' consensus estimate of 23 cents per share (-28.1% YoY). The pros, on average, also anticipate revenue of $4.0 billion in SQ's fourth quarter, up 28% from the year prior.