Earnings Previews: Amazon, Apple, Intel, US Steel

The three major U.S. equity indexes closed lower on Tuesday. The Dow dropped 0.71%, the S&P 500 fell 1.15%%, and the Nasdaq Composite slid 1.87%. Eight of 11 sectors, led by consumer cyclicals (down 3.2%) and communications services (off 2%) closed lower while utilities (up 0.6%) led the gainers. At Federal Reserve Chair Jerome Powell’s press conference this afternoon, economists are expecting to hear that the central bank’s policy rate will rise by 0.75%. The major indexes are trading higher in the first half-hour of regular trading Wednesday morning.

After markets closed Tuesday, Alphabet reported misses on both the top and bottom lines. Better-than-expected search ad sales buoyed investors’ spirits, however, and the shares were trading up about 5% Wednesday morning.

Microsoft, like Alphabet, missed on both the top- and bottom-line estimates. An upbeat revenue forecast based on demand for the company’s cloud service has the stock trading up about 4.9% Wednesday.

Visa beat analysts’ estimates on both profit and revenue. Shares of the credit-card company traded down about 1.2% Wednesday morning.

Before markets opened Wednesday morning, Boeing missed on both top- and bottom-line estimates. The aerospace company said it remained on track to post positive free cash flow in 2022 and that 737 production has now reached 31 per month. The stock traded up by about 3.3%.

Cameco reported better-than-expected earnings per share (EPS) and revenue. Shares of the uranium company traded up more than 6.7% Wednesday morning.

Kraft Heinz also beat estimates for the top and bottom lines. The stock of the food company traded down about 7.6% Wednesday.

T-Mobile reported a surprise loss of $108 million that was blamed on costs related to Sprint merger and other one-time items (totaling $1.09 billion). The telecom  also missed revenue estimates even though service revenues rose by 5.7% year over year. Shares traded up about 3.8%.

After markets close Wednesday afternoon, Antero Resources, Ford, Meta Platforms, and Qualcomm will report quarterly results.

We’ve also previewed five companies reporting results before markets open Thursday morning: Comcast, Merck, Southwest Airlines, Tilray, and Valero Energy.

Here’s a look at four companies set to report results after markets close Thursday afternoon.

Amazon

In mid-July of last year, Amazon.com Inc. (NASDAQ: AMZN) posted a new all-time high share price. Since then, the stock has dropped by more than 38%. For the year to date, shares have lost nearly 31%. Analysts began cutting full-year earnings estimates after Amazon reported first-quarter earnings in April. In July alone, EPS estimates have been reduced by nearly 13%, and revenue estimates have been shaved by about 1%. The $3.9 billion acquisition of One Medical announced last week was widely applauded by analysts but has not boosted investors’ spirits.

All but three of 53 analysts give Amazon stock a Buy or Strong Buy rating. Of the holdouts, one rates the stock a Hold, and one each gives the shares a Sell or Strong Sell rating. At a current price (split adjusted) of around $114.80, the upside potential based on a median price target of $172.50 is 50.3%. At the high price target of $270.00, the upside potential is 135.2%.

Analysts are looking for second-quarter revenue of $119.16 billion, up 2.3% sequentially and an increase of 5.4% year over year. Adjusted earnings per share (EPS) are expected to be $0.12 compared with a loss of $0.38 in the prior quarter and down 84.2% year over year. For the full 2022 fiscal year, EPS is expected to come in at $0.38, down 88.2%, on sales of $519.1 billion, a gain of 10.5%.

Amazon stock trades at a multiple of 299.7 times expected 2022 EPS, 45.5 times estimated 2023 earnings of $2.52, and 28.7 times estimated 2024 earnings of $4.00 per share. The stock’s 52-week range is $101.26 to $188.11. Amazon does not pay a dividend. Total shareholder return over the past 12 months was negative 37.9%.

Apple

The largest U.S.-listed company by market cap, Apple Inc. (NASDAQ: AAPL), has added just 1.75% to its share price over the past 12 months. For the year to date, the share price is down by about 14.6%. It’s an unusual year for Apple, and the company is reducing spending and cutting its hiring pace. The company has already said that revenue will be down by $4 billion to $8 billion because of supply-chain and COVID issues in China. The consensus 12-month EPS estimate has dropped by around 3% since Apple reported fiscal second-quarter earnings in April.

Of 44 analysts covering Apple, 33 give the stock a Buy or Strong Buy rating, and another nine rate the shares a Hold. At a current price of around $151.60, the upside potential based on a median price target of $181.50 is about 19.8%. At the high price target of $214.00, the upside potential is more than 41.2%.

Analysts expect the Dow 30 component to report 2022 fiscal third-quarter revenue of $82.97 billion, down 14.7% sequentially and up 1.9% year over year. Adjusted EPS is expected to come in at $1.15, down 24% sequentially and off 11.5% year over year. For the 2022 fiscal year ending in September, analysts expect the company to report EPS of $6.13, up 9.3%, on sales of $393.55 billion, an increase of about 7.6%.

Apple stock trades at a multiple of 24.7 times expected 2022 EPS, 23.3 times estimated 2023 earnings of $6.50, and 22.3 times estimated 2024 earnings of $6.80 per share. The stock’s 52-week range is $129.04 to $182.94. Apple pays an annual dividend of $0.88 (yield of 0.61%). Total shareholder return for the past 12 months was 2.33%.

Intel

Shares of Intel Corp. (NASDAQ: INTC) have dropped by around 28% over the past 12 months. The chipmaking giant needs to figure out a way to regain market share. Intel’s plan to build more fabrication facilities and upgrade its technology is not expected to close the gap between it and Taiwan Semiconductor. Its recent agreement to become a third-party supplier for MediaTek will help, as will recently passed federal legislation providing some $52 billion in funding to boost U.S. semiconductor manufacturing. But will it be enough?

Of 38 analysts covering the stock, just 10 have a Buy or Strong Buy rating on the stock. There are 20 Hold ratings and the others rate the stock a Sell or Strong Sell. At a current price of around $39.00, the implied upside based on a median price target of $45.00 is about 15.4%. At the high target of $72.00, the implied upside is 84.6%.

Second-quarter revenue is forecast at $17.93 billion, down 2.3% sequentially and down 3.2% year over year. Adjusted EPS is forecast at $0.70, down 20% sequentially and down 45.3% year over year. For the 2022 fiscal year, Intel is expected to report EPS of $3.39, down 38%, on sales of $74.35 billion, down about 0.5%.

Intel stock trades at a multiple of 11.5 times expected 2021 EPS, 11.4 times estimated 2023 earnings of $3.41, and 10.9 times estimated 2024 earnings of $3.56 per share. The stock’s 52-week range is $35.54 to $56.28. Intel pays an annual dividend of $1.46 (yield of 3.75%). Total shareholder return over the past year is negative 26.2%.

U.S. Steel

Over the past 12 months, shares of United States Steel Corp. (NYSE: X) have lost about 15.5% of their value. For the year to date, the stock is down 14.3%. From its peak in late March, U.S. Steel stock dropped more than 56% to post a 52-week low earlier in July. Last month, the company announced that it would shut down its furnaces in Granite City, Ill., and convert the plant to a producer of pig iron, a material needed to produce steel in the company’s other mills. As many as 1,000 workers could lose their jobs by the time the transition is completed in 2024.

Of 11 brokerages covering the shares, only three have given the stock a Buy or Strong Buy rating. That’s equal to the number giving the stock a Sell or Strong Sell rating. The other five rate the stock a Hold. At a current price of around $20.20, the upside potential to a median price target of $23.00 is 13.9%. At the high target of $44.00, the upside potential is nearly 118%.

Second-quarter revenue is expected to come in at $5.82 billion, up 11.2% sequentially and and an increase of 15.7% year over year. Adjusted EPS is forecast at $3.86, up 26.5% sequentially and a gain of 14.5% year over year. For the 2022 fiscal year, analysts expect U.S. Steel to post EPS of $10.51, down 22.1%, on sales of $20.81 billion, up 2.7%.

U.S. Steel stock trades at 1.9 times expected 2022 EPS, 6.9 times estimated 2023 earnings of $2.81, and 9.8 times estimated 2024 earnings of $2.04 per share. The stock’s 52-week range is $16.41 to $39.25 and the company pays an annual dividend of $0.20 (yield of 0.98%). Total shareholder return for the past 12 months was negative 15.5%.

By Paul Ausick