Investing

Earnings Previews: Caterpillar, Chevron, Honeywell, US Steel, Visa

Crude prices have improved to around $53 a barrel, about where they began 2020. Crude averaged less than $40 a barrel last year and is expected to stop just short of averaging $50 a barrel in 2021. That will help Chevron, but at this point, investors care more about the company’s dividend than its prospects.

Analysts are looking for fourth-quarter EPS of $0.07, down from $1.49 a year ago and revenue of $26.4 billion, down 27.4% year over year. For the full year, Chevron is expected to post a net loss of $0.05 per share and revenue is forecast to fall by 33% to $98.1 billion.

Chevron stock trades at around $89 a share, about 26.5 times expected 2021 earnings, in a 52-week range of $51.60 to $112.60. The price target on the stock is $103.98. Chevron pays a dividend of $5.16 (yield of 5.77%).

Caterpillar

Caterpillar Inc. (NYSE: CAT), another Dow component, also is on tap to report Friday morning. The company’s stock has added more than 40% in the second half of 2020 to close the year with an annual gain of 27% to its share price. The share price rise is due in large part to hopes for an end to the pandemic and to a stimulus package from the Biden administration that includes a significant amount for infrastructure improvements.

The forecast for Caterpillar’s EPS is $1.49, a decline of 43% year over year. Revenue is expected to drop by more than 14% to $11.3 billion. For the 2020 fiscal year, EPS is expected to tumble by about half to $5.47, while revenue is seen down more than 23%.

At a current price of around $184, shares trade at 29 times expected 2020 earnings and 23 times expected 2021 EPS. The stock’s 52-week range is $87.50 to $200.17, and the 12-month price target is $190.45. Caterpillar pays a dividend of $4.12 (yield of 2.2%).

Honeywell

Honeywell International Inc. (NYSE: HON) was added to the Dow Jones industrial average when Exxon, Raytheon and Pfizer were removed in August. The company recently sold its footwear business for $230 million and, while that’s not enough to offset the pandemic-induced decline in revenue, the better news is that as vaccines stem the spread of the coronavirus, Honeywell’s aerospace business is expected to begin rolling again.

The stock managed to add nearly 23% to its share price last year after tumbling to a drop of 40% in late March.

Fourth-quarter EPS is estimated at $1.96, a decline of about 4.9% compared to the fourth quarter of 2019. Revenue is expected to be down by about 11.6% to $8.4 billion. For the full year, analysts are looking for EPS of $7.03 (down nearly 14%) and sales of $32.2 billion (down 12.4%). At a recent price of around $199 a share, the stock traded at 28.3 times expected 2020 EPS and 25.4 times expected 2021 EPS.