Earnings Previews: Bitfarms, Workhorse

In morning trading on Thursday, the Dow Jones industrials were down 1.14%, the S&P 500 down 0.64% and the Nasdaq 0.19% lower.

After U.S. markets closed on Wednesday, Disney missed the consensus earnings per share (EPS) estimate but did beat revenue expectations. That was not good enough to overcome a decline in its cable networks business. Shares traded down nearly 9% in the first half-hour of trading on Thursday.

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Robinhood beat estimates on both the top and bottom lines, and investors have responded warmly to the company’s plan to begin 24-hour trading in a selected bag of stocks, including Tesla, Amazon, and Apple. The stock is up 6.5%.

Unity Software missed analysts’ EPS estimate but beat on revenue and issued upside guidance for the second quarter. Shares traded up 10.5%.

Before U.S. markets opened on Thursday, Algonquin Power also beat on both the top and bottom lines. Algonquin said it will conduct a strategic review of its renewable energy business with the goal of “enhancing shareholder value.” Shares traded up about 0.3%.

JD.com hammered estimates, handily beating both EPS and revenue forecasts. Shares traded up more than 6%.

Faraday Future, News Corp and Petrobras are scheduled to report quarterly results after markets close on Thursday. No notable results are scheduled for release on Friday.

Here is a look at two companies scheduled to report results first thing Monday morning.

Bitfarms

Toronto-based cryptomining firm Bitfarms Ltd. (NASDAQ: BITF) came public in late June 2021, and the shares reached their all-time high of around $9.00 in early November. Since then, the stock has plunged by more than 87%. That is almost 20 percentage points worse than Bitcoin’s loss over the same period.

What may be more interesting about crypto mining than the crypto itself is the beginning of a move by some miners to repurpose their expensive mining machines to work on AI and other compute-intensive applications. Bitfarms competitor Hut 8 generated nearly $17 million in 2022 revenue from hiring out its mining machines for high-performance computing and AI clients.

Even though the stock trades about 5 million shares daily, only two analysts cover it, and both have Strong Buy ratings and a price target of $4.00. At a recent share price of $1.10, the stock’s upside potential is more than 350%.

First-quarter revenue is forecast at $28.9 million, which would be up nearly 6.9% sequentially but down 28.3% year over year. Bitfarms is expected to post adjusted EPS of $0.2, up from flat sequentially and up from EPS of $0.01 in the year-ago quarter. For the full 2023 fiscal year, the company is expected to report EPS of $0.15 on revenue of $129.3 million, down 9.2%.

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The stock trades at 7.4 times expected 2023 EPS and 111.6 times estimated 2024 earnings of $0.01 per share. Its 52-week trading range is $0.38 to $2.33. Bitfarms does not pay a dividend. Total shareholder return for the past year is negative 46.89%.

Workhorse

Workhorse Group Inc. (NASDAQ: WKHS) has experienced some big highs and one big low since posting an all-time low in late 2018. Shares were trading at an all-time high just two years later as Workhorse appeared to have the inside track to winning a huge contract to provide delivery vehicles to the U.S. Postal Service. The contract went to Oshkosh instead, and Workhorse stock plunged from around $43.00 to its current level of around $1.00.

Workhorse has just launched a new electric delivery van, and regular production is expected to begin in the third quarter. The shares are among the most speculative out there, but then, high risk, high potential reward.

Of seven analysts covering the stock, four have a Hold rating and the other three rate the shares at Buy. At a price of around $1.00 a share, the upside potential based on a median price target of $3.00 is 200%. At the high price target of $6.00, the upside potential is 500%.

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First-quarter revenue is forecast at $9.85 million, up 185.8% sequentially and up from $10 million in the year-ago quarter. Analysts expect Workhorse to post an adjusted loss per share for the quarter of $0.18, better than the $0.24 per-share loss in the prior quarter but worse than the loss per share of $0.15 a year ago. For the full year, the adjusted loss is forecast at $0.58 per share, better than the year-ago loss of $0.74 on sales of $89.24 million, up from just $5.02 million in 2022.

Workhorse is not expected to post a profit until 2025. The stock trades at an enterprise value-to-sales multiple of 0.9 for 2023. For 2024 and 2025, the multiple is 0.3 and 0.2, respectively. The stock’s 52-week range is $0.87 to $4.73, and Workhorse does not pay a dividend. Total shareholder return for the past year is negative 62.97%.

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