Investing

Earnings Previews: American Express, Honeywell, Schlumberger

Paul Ausick

Published: July 21, 2021 12:19 pm

Last Updated: September 7, 2022 11:32 am

The second week of June-quarter earnings results continues to see companies overwhelmingly beat or at least match analysts’ forecasts. Whether that is due to low expectations or a strong economic recovery probably depends on one’s point of view.

On Tuesday, we previewed four companies reporting results after markets close Wednesday (CSX, Kinder Morgan, Las Vegas Sands and Texas Instruments) along with four companies that will report before markets open Thursday morning (American Airlines, AT&T, Cleveland-Cliffs and Freeport-McMoRan).

Earlier on Wednesday, we took a look at three companies set to report quarterly results after markets close Thursday (Intel, Snap and Twitter).

Here’s a look at three companies due to report results before Friday’s opening bell.

American Express

Dow Jones industrial average component American Express Co. (NYSE: AXP) has enjoyed a share price rise of more than 85% over the past 12 months. The stock is up about 44% for the year to date, about three times better than the increase in the S&P 500 and about 3.5 times better than the Dow. People are spending money or using their credit cards more this year, and Amex also has been able to release some of the reserves it had to pile up last year. That’s really juiced profits.

Analysts are mixed on the stock. Of 27 ratings, 12 are Buy or Strong Buy, another 12 are Hold and three are Strong Sell. At a recent price of around $172 a share, the stock has outrun its median price target. At the high target of $225, the upside potential is nearly 31%.

For the second quarter, Amex is expected to post revenue of $9.59 billion, up by about 5.8% sequentially and 25% higher year over year. Earnings per share (EPS) for the quarter are forecast to come in at $1.61, down about 41% sequentially, but up by more than 455% year over year. In 2021, analysts estimate EPS will rise by 98% to $7.48 and revenue is expected to increase by just over 10% to $39.74 billion.

The stock trades at around 21.8 times expected 2021 EPS, 17.7 times estimated 2022 EPS and 15.3 times estimated 2023 earnings. Its 52-week trading range is $89.11 to $174.76. The company pays an annual dividend of $1.72 (yield of 1.06%).

Honeywell

The other Dow component reporting quarterly results Friday morning is Honeywell International Inc. (NASDAQ: HON). Shares have added more than 53% over the past 12 months and about 9.6% for the year to date. Honeywell has beaten EPS estimates in each of the four preceding quarters, and the widest margin came in the first quarter of this year. The stock was added to the Nasdaq-100 index on Wednesday.

Of 25 surveyed analysts covering the company, nine rate the stock a Hold, 14 rate it at Buy or Strong Buy and two have lower ratings. At a price of around $231.10, the upside potential based on a median price target of $243.50 is about 5.4%. At the high target of $270, upside potential is 16.8%.

Analysts are looking for EPS of$1.95, three cents more sequentially and up nearly 55% year over year. Revenue is tabbed at $8.66 billion, up about 2.5% sequentially and about 15.8% year over year. For the full year, revenue is projected to grow by 6.9% to $34.88 billion and EPS is forecast to rise by 13.5% to $8.01.

Honeywell stock trades at around 27.5 times expected 2021 EPS, 24.3 times estimated 2022 EPS and 21.9 times estimated 2023 earnings. Its 52-week range is $146.21 to $234.02. The company pays an annual dividend of $3.72 (yield of 1.69%).

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Schlumberger

Oilfield services giant Schlumberger Ltd. (NYSE: SLB) saw its share price drop by about 44% last year. Over the past 12 months, the stock has posted a gain of nearly 58%, with a gain of nearly 32% coming in 2021. It is unclear how the recent OPEC+ decision to increase production will affect exploration and production companies, but a better-than-expected report from rival Halliburton on Tuesday has given the Schlumberger stock a boost as well.

Of 26 brokerages covering the stock, 14 rate the stock a Buy and another six rate it at Strong Buy. There are also five Hold ratings and one Sell rating. At a price of around $28.60, the stock’s upside potential to the median price target of $37 is 29%. At the high target of $47, upside potential reaches 64%.

Analysts estimate revenue will rise by 5.7% sequentially to $5.52 billion in the second quarter. The year-over-year increase is about 3%. Adjusted EPS is forecast to rise by nearly 24% sequentially to $0.26. Year over year, the increase is about 81%. For the full year, analysts are looking for EPS of $1.15, up nearly 69%, and revenue of $22.63 billion, a decline of about 4.1%.

Schlumberger stock trades at around 23.2 times expected 2021 EPS, 16.2 times estimated 2022 EPS and 11.9 times estimated 2023 earnings. Its 52-week range is $13.70 to $36.87. The company pays an annual dividend of $0.50 (yield of 1.88%).