The three major U.S. equity indexes closed mixed on Friday. The Dow Jones industrials ended the day up 0.45%, while the S&P 500 closed 0.03% lower and the Nasdaq was down 0.52%. Seven of 11 sectors closed higher, with real estate (0.64%) and utilities (0.63%) posting the biggest gains. Communication services (−0.70%) and tech (−0.67%) lagged.
In early trading Monday, the delivery price of West Texas Intermediate (WTI) crude fell below the futures price, a market condition known as contango. WTI sank to $73.60 a barrel and recently traded below its July 2023 delivery price of $74.14. This is an 11-month low and down around $50 a barrel lower compared to the high posted in March. The lower price still implies solid profits for producers.
Economic reports due this week include the Conference Board’s Consumer Confidence index (Tuesday), the crude oil inventory report (Wednesday), the weekly report on new claims for jobless benefits (Thursday), the personal consumption and expenditure (PCE) report from October (also Thursday) and the nonfarm payroll report for November (Friday).
The three major indexes traded lower in the first few minutes of Monday’s regular trading session.
Chinese e-commerce firm Pinduoduo reported third-quarter results before markets opened on Monday, including revenue of $4.99 billion and adjusted earnings per American depositary share of $1.21, well above expectations. The stock trading nearly 13% higher shortly after Monday’s opening bell, after posting a new 52-week high.
Before U.S. markets open on Tuesday, Bilibili is on deck to report quarterly results. CrowdStrike and Hewlett Packard Enterprise are expected to post their results after markets close Tuesday.
Here is what to expect when the following three firms report quarterly results first thing Wednesday morning.
Frontline
Frontline Ltd. (NYSE: FRO) operates a fleet of about 70 tankers transporting crude oil and refined products worldwide. Its stock has more than doubled over the past 12 months, but the climb has been choppy.
Last week, the day rate reached $100,000 for the first time in more than two years on the benchmark trade route between North America and Europe. The price cap on Russian crude already has forced the country to take longer routes to Asian markets rather than the short routes to traditional European markets. That supports high pricing on other routes, price increases are likely to continue, and that will benefit shippers like Frontline.
Of just five analysts covering the stock, three have a Buy or Strong Buy rating. At a recent share price of around $13.80, the potential upside based on a median price target of $15.50 is 12.3%. At the high price target of $17.00, the upside potential is 23.2%.
Third-quarter revenue is forecast at $227.51 million, which would be up almost 43% sequentially and by 230% year over year. Analysts expect adjusted EPS of $0.38 per share, up 81% sequentially, as well as up from a loss per share of $0.18 in the year-ago quarter. For the full 2022 fiscal year, Frontline is expected to report EPS of $1.29, up from a loss per share of $0.28 in 2021, on revenue of $833.53 million, up 133.7%.
The stock trades at 7.0 times the expected 2022 EPS and 4.5 times the estimated 2023 earnings of $3.06 per share. Frontline’s 52-week trading range is $6.10 to $14.73. The company has suspended its dividend. Total shareholder return for the past year was nearly 105%.
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