Earnings Previews: Halliburton, Johnson & Johnson, Philip Morris, Procter & Gamble, Steel Dynamics

The first week of the September-quarter earnings season is now in the books. At a glance, of 24 companies we followed that reported quarterly results this week, only two missed profit estimates and only three missed revenue forecasts. That’s a high-quality start.

Next week starts off with just a couple of interesting quarterly reports due: grocery store operator Albertsons and financial services company State Street.

After Monday’s closing bell, we shall hear from a bellwether steelmaker, and Tuesday morning includes reports from two Dow Jones industrial average components, an oil patch biggie and a tobacco company.

Steel Dynamics

On August 13, Steel Dynamics Inc. (NASDAQ: STLD) posted an all-time high share price of nearly $75. Over the past 12 months, that represents a share price gain of almost 130%. Since then, the shares have dropped by more than 15% but still show an overall 12-month gain of around 92%. That gain, however, trailed Cleveland-Cliffs (196%), U.S. Steel (170%), Arcelor Mittal (134%) and Nucor (112%).

One might conclude that it has been a pretty good year for steel. Much of the gain, of course, was due to the expected wind-down of the COVID-19 pandemic and a giant infrastructure spending bill emanating from the U.S. government. Neither has quite materialized, but rising hopes have lifted all the steel stocks from three-month lows over the past couple of weeks. Steel Dynamics reports third-quarter results after markets close Monday.

Analysts are bullish on the stock with nine of 11 rating the shares a Buy or Strong Buy and the other two assigning a Hold rating. At a recent price of around $62.20, the upside potential based on a median price target of $75 is 20.6%. At the high price target of $104, the upside potential is 67.2%.

The consensus third-quarter revenue estimate is $5.1 billion, which would be up 14% sequentially and more than double year over year. Adjusted earnings per share (EPS) are tabbed to come in at $4.89, up nearly 44% sequentially and nearly 10 times higher than a year ago. For the full fiscal year, Steel Dynamics is expected to report EPS of $15.84, up more than 450%, on sales of $18.04 billion, up 88%.

The stock trades at 3.9 times expected 2021 EPS, 6.0 times estimated 2022 earnings and 10.1 times estimated 2023 earnings. The stock’s 52-week range is $30.26 to $74.37, and Steel Dynamics pays an annual dividend of $1.04 (yield of 1.69%).

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