Investing

Earnings Previews: Altria, Apple, Facebook, McDonald's and Tesla

Through the end of this week, more than 200 U.S.-listed firms will report results for the quarter ended on December 31. Over those few days, the most valuable company in the world will report results, as will the electric vehicle maker that saw its shares rise by nearly 750% in 2020.

Three of the firms we’ve previewed report after markets close on Wednesday and the other two report results before markets open Thursday.

Apple

With a market cap of more than $2.3 trillion, Apple Inc. (NASDAQ: AAPL) leads off our preview. The company launched four new models of its iPhone 12 during its first fiscal quarter of 2021, and the 5G phones have been a big hit with consumers, even with stiff price tags for the top of the line devices. iPhone sales are expected to account for somewhere around 60% to 67% of total fourth-quarter revenue, with iPad and Mac sales accounting for as much as 25%.

The best news for investors, though, is that Apple is expected to continue its announced plan to become cash neutral over time (i.e., total cash equals total debt). That means the company will be returning around $73 billion to shareholders, largely through buybacks or dividends.

Analysts have forecast fourth-quarter earnings per share (EPS) of $1.41 and revenue of $103.3 billion. Those estimates reflect an increase of nearly 13% in EPS and 16.7% in revenue. Apple’s share price soared by 82% in 2020 and trades up more than 7% so far in 2021. At a current share price of around $142, the stock trades at around 36 times expected 2021 earnings and 33 times expected 2022 earnings.

The consensus price target on the stock is $136.09, and Apple pays an annual dividend of $0.82 (yield of 0.57%). But no one buys Apple for its dividend. After 40 years as a publicly traded company, Apple is still a growth stock.

Facebook

Facebook Inc. (NASDAQ: FB) also reports results late Wednesday. Despite the threat of a federal investigation and more pushback from countries other than the United States, Facebook is expected to put up some big numbers due to the COVID-19 pandemic. The biggest threat to the company’s future is an antitrust suit filed in December by the U.S. Department of Justice and the attorneys general of 46 states.

Analysts tilt heavily toward Buy ratings on the stock, with price targets falling in a range of $195 to $397 per share. For example, BMO Capital Markets recently raised its rating on the stock to Outperform and lifted its price target to $325.

For the fourth quarter, analysts expect the company to post EPS of $3.21 on revenue of $26.4 billion. That’s an earnings increase of more than 25% year over year and a similar increase in revenue. For the fiscal year, EPS is forecast at $9.37 (up nearly 46%) and revenue is tabbed at $84.1 billion (up 19%). Facebook’s share price rose by 33% in 2020 and has added about 3.7% so far this year.

The stock trades at a multiple of 30 to expected 2020 EPS and 27 to expected 2021 earnings. The consensus price target on the stock is nearly $325, implying an upside of nearly 15% to the current trading price of around $283. The stock’s 52-week range is $137.10 to $304.67. Facebook does not pay a dividend.

Tesla

Tesla Inc. (NASDAQ: TSLA) has already announced that it fell fewer than 500 units short of delivering 500,000 new cars this year. Despite a share price gain of more than 740% last year, 12 of 31 analysts rate the stock a Sell, mostly because they believe the stock is monumentally overvalued.