Two of the seven stocks that have contributed 17% of the S&P 500’s gains this year will report earnings after markets close on Tuesday. Two more will release their earnings reports later this week. After Tesla’s weak report, investors will be taking a close look at these other giants.
Monday Afternoon Earnings Reports
After U.S. markets closed on Monday, Cleveland-Cliffs reported earnings per share (EPS) above consensus estimates. The iron ore miner and steelmaker also said it expects to chop another $15 per ton from its steelmaking unit costs, with more reductions to come next year. The stock traded up 4.1% shortly after Tuesday’s opening bell.
Tuesday Morning Earnings Reports
Before markets opened on Tuesday, 3M beat consensus estimates on the top and bottom lines. Revenue was down 3.6% year over year. The company also raised fiscal year EPS guidance and reduced its expected revenue decline. Shares traded up 4.2%.
Halliburton posted a beat to its EPS estimate while missing analysts’ consensus revenue target. Sales did rise by more than 8% year over year, and profits rose by 32%. Not good enough, apparently. The stock traded down 1.6%.
RTX beat estimates on the top and bottom lines and then boosted its share buyback program by $10 billion. The company said it is committed to returning $36 billion to $37 billion to shareholders by the end of 2025. Music to investors’ ears drove shares up 5.3%.
General Electric reported revenue almost 20% higher than a year ago and beat the EPS estimate by more than 46%. The company also sharply raised fiscal year EPS guidance. The stock traded up nearly 3%.
General Motors hammered consensus EPS and revenue estimates, beating the profit estimate by 22% and the revenue estimate by 4%. Revenue was up 5.4% year over year. GM withdrew its guidance for 2023, citing the impact from the United Auto Workers union strike. Worse, perhaps, GM also dumped its guidance for 2024’s EV production. The stock traded up about 0.5%
NextEra Energy beat top-line and bottom-line estimates and issued guidance in line with consensus estimates for 2023 and 2024. The company also said it expects dividend growth of roughly 10% annually through the end of next year. Shares jumped 4.8%
ADM beat the consensus EPS estimate but fell short on revenue. The food products company saw revenue fall by more than 12% year over year. Shares traded down 0.3%
Coca-Cola posted revenue that was up 8.1% year over year and about half a point better than analysts estimated. Profits also came in higher than the consensus and were flat year over year. Warren Buffett’s favorite soft drinks maker also raised EPS guidance and said organic revenue growth would be up 10% to 11% for 2023. Shares traded up more than 3%.
Verizon offered a mixed report, missing the revenue estimate and beating the consensus for EPS. For the 2023 fiscal year, Verizon expects operating cash flow of $36.25 billion to $37.25 billion and free cash flow of more than $18 billion. That gave the stock a boost of more than 7%.
After U.S. markets close on Tuesday, Alphabet, Microsoft, Snap, Texas Instruments and Visa will release their earnings reports for the quarter. Look for results from Boeing, General Dynamics and T-Mobile the following morning.
Here is a look at three earnings reports on the calendar for Wednesday afternoon.
Oilfield services firm Baker Hughes Co. (NASDAQ: BKR) has seen a share-price gain of 30% over the past year, with more than half that gain coming in 2023.
When the company reported second-quarter results in late July, CEO Lorenzo Simonelli said he was “optimistic on the outlook for 2023.” Cash flow for the quarter totaled $858 million and free cash flow came in at $623 million. The company’s order book was solid, and Baker Hughes lifted order guidance to a new range of $11.5 billion to $12.5 billion. Analysts got the message and raised their estimates for both sales and earnings.
Those analysts remain bullish on the stock, with 22 of 30 having a Buy or Strong Buy rating on it. Six more rate the stock at Hold. At a recent price of around $34.70 a share, the upside potential based on a median price target of $40.00 is about 15.3%. At the high price target of $47.00, the implied upside is 34.7%.
The consensus third-quarter revenue estimate is $6.52 billion, which would be up 3.2% sequentially and by 21.4% year over year. Adjusted EPS are forecast to rise by a penny sequentially and by 53.8% year over year. For the 2023 fiscal year, analysts forecast EPS up 71.1% to $1.54 on sales of $25.4 billion, up 20.1%.
Baker Hughes stock trades at 22.5 times expected 2023 EPS, 16.9 times estimated 2024 earnings of $2.06 and 13.7 times estimated 2025 earnings of $2.53. The 52-week trading range is $25.74 to $37.58. Baker Hughes pays an annual dividend of $0.80 (yield of 2.31%). Total shareholder return for the past year was 33.32%.
Shares of International Business Machines Corp. (NYSE: IBM) have added 5% over the past 12 months. That total includes a drop of more than 7% in the past month. Big Blue gets little attention as an AI provider because its focus is on enterprise-level applications, not gee-whiz drawing applications. In other words, IBM is going where the money is. IBM has assured its enterprise customers that it will stand by its generative AI model (watsonx) with its “contractual intellectual property protections.” Let’s call it a hallucination-free zone.
Of 17 brokerages covering the firm, 10 have a Hold rating and five rate the stock at Buy or Strong Buy. At a share price of around $136.40, the implied upside based on a median price target of $145.00 is about 6.3%. At the high price target of $188.00, the implied upside is 37.8%.
Third-quarter revenue is expected to come in at $14.73 billion, down 4.8% sequentially but 4.4% higher year over year. Adjusted EPS are forecast at $2.13, down 2.5% sequentially and up 17.7% year over year. The current full-year estimates call for EPS of $9.54, up 4.4%, on sales of $62.07 billion, up 2.5%.
IBM stock trades at 14.3 times expected 2023 EPS, 13.6 times estimated 2024 earnings of $10.02 and 12.9 times estimated 2025 earnings of $10.58 per share. The 52-week trading range is $120.55 to $153.21. IBM pays an annual dividend of $6.64 (yield of 4.84%), and the total shareholder return for the past 12 months was 10.27%.
Shares of Meta Platforms Inc. (NASDAQ: META) have soared in 2023. The stock is up by more than 140% over the past 12 months, and the year-to-date gain is more than 160%. Much of that gain was the result of firing 21,000 people, while the rest is likely due to an increase in advertising. Alphabet, which reports earnings late Tuesday, will lay down the target for ad growth in the third quarter. If Meta does better, the shares will jump; if it does worse, well …
Of 55 analysts covering Meta, 47 have a Buy or Strong Buy rating and six have Hold ratings. At a share price of around $314.00, the upside potential based on a median price target of $375.00 is 19.4%. At the high target of $435.00, the upside potential is 38.5%.
Meta is expected to report third-quarter revenue of $33.45 billion, up 4.5% sequentially and by 20.7% year over year. Adjusted EPS are pegged at $3.61, up 21% sequentially and 120.1% higher year over year. For the 2023 fiscal year, consensus estimates call for EPS of $13.37, up 55.7%, on sales of $132.5 billion, up 13.6%.
The stock trades at 23.5 times expected 2023 EPS, 18.9 times estimated 2024 earnings of $16.58 and 16.1 times estimated 2025 earnings of $19.55 per share. The 52-week trading range is $88.09 to $330.54. Meta does not pay a dividend, and the total shareholder return for the past year was 141.53%.
Originally published at 24/7 Wall St.
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