Bloomberg reported earlier this week that Teck Resources may announce a spin-off of its met coal business in order to focus more attention on its industrial metals. The company did not respond to requests for comment. Met coal accounted for 55% of Teck’s gross profit in 2021. In addition to the headline value of getting rid of its coal business, a spin-off would lower the price of the remaining part to a range of $10 billion to $15 billion and make Teck a more attractive takeover target.
Of 23 analysts covering the stock, 16 have a Buy or Strong Buy rating and six more rate it at Hold. At a share price of around $44.00, the upside potential based on a median price target of $45.90 is 4.3%. At the high price target of $55.50, the upside potential is 26.1%.
Analysts expect Teck to report fourth-quarter revenue of $2.59 billion, down 23.4% sequentially and by 25.6% year over year. Adjusted EPS are expected to reach $0.94, down 25.1% sequentially and by 53.2% year over year. For the full 2022 fiscal year, EPS are pegged at $6.76, up 51%, on revenue of $14. billion, up 31.3%.
The stock trades at 6.5 times expected 2022 EPS, 9.1 times estimated 2023 earnings of $4.84 and 9.4 times estimated 2024 earnings of $4.66 per share. The stock’s 52-week range is $24.72 to $46.10. Teck pays an annual dividend of $0.37 (yield of 0.88%). Total shareholder return over the past 12 months was 23.52%.
Walmart
The second Dow component reporting early Tuesday is Walmart Inc. (NYSE: WMT). Over the past 12 months, the company has seen its share price increase by just over 8%. After bouncing higher and then lower, the share price is roughly at its level three months ago. The holiday quarter is expected to be the company’s best of the year, but still less than 5% better than either of the two prior quarters. One analyst thinks that same-store sales could come in much better than that, which would be a nice positive surprise for investors.
Analysts remain bullish on the stock, however, with 31 of 41 having a Buy or Strong Buy rating and the rest with Hold ratings. At a share price of around $144.00, the upside potential at the median price target of $160.00 is 11.1%. At the high target of $175.00, the implied upside is 21.5%.
For its fourth quarter of fiscal 2023, Walmart is expected to report sales of $158.51 billion, up 4.7% sequentially and up by about the same percentage year over year. Adjusted EPS are pegged at $1.51, up 0.8% sequentially but 1.3% lower year over year. For the full 2023 fiscal year that ended in January, analysts forecast EPS of $6.08, down 5.9%, on sales of $602.17 billion, up 6.1%.
Walmart stock trades at 23.7 times expected 2023 EPS, 22.2 times estimated 2024 earnings of $6.50 and 20.2 times estimated 2025 earnings of $7.13 per share. The stock’s 52-week range is $117.27 to $160.77. Walmart pays an annual dividend of $2.24 (yield of 1.53%). Total shareholder return for the past year was 9.74%.
Originally published at 24/7 Wall St.
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