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

Philip Morris

The maker and distributor of Marlboro cigarettes outside the United States, Philip Morris International Inc. (NYSE: PM) has added about 33% to its share price over the past 12 months. Shares dropped 9.5% in September but have recovered about half that loss in the first two weeks of October. The company reports quarterly results before markets open Tuesday.

Earlier this week, the stock got a positive jolt from FDA approval of a rival’s e-cigarette. Philip Morris’s parent company, Altria, owns a 35% stake in e-cigarette maker Juul that cost the company $12.8 billion in 2018, and on which Altria had written off $11.2 billion by last October. Philip Morris and its peers will continue to see share price gains as long as they can raise prices on their products and generate dividends.

Sentiment on the company is decidedly bullish, with 15 of 20 analysts rating the stock a Buy or Strong Buy and the other five rating the shares a Hold. At a price of around $99.30, the upside potential based on a median price target of $110 is about 10.8%. At the high price target of $130, the upside potential is nearly 31%.

Third-quarter revenue is forecast at $7.93 billion, up 4.4% sequentially and 6.4% year over year. Adjusted EPS are forecast to come in at $156, down a penny sequentially and up about 11% year over year. For full fiscal 2021, Philip Morris is expected to report EPS of $6.09, up nearly 18%, on sales of $31.17 billion, up 8.7%.

The stock trades at 16.0 times expected 2021 EPS, 14.6 times estimated 2022 earnings and 13.2 times estimated 2023 earnings. The stock’s 52-week range is $68.91 to $106.51, and Philip Morris pays an annual dividend of $5.00 (yield of 5.06%).

Procter & Gamble

Dow stock Procter & Gamble Co. (NYSE: PG) has posted a share price gain of less than 3% over the past 12 months, including a drop of 14% in early March. Since that disaster, shares have added more than 19%. Since January of 2020, the stock is up about 22.5%, reflecting market share growth that lifted revenue and profits.

Now, the company faces the same supply chain woes as other firms and the question is can P&G raise its prices to consumers to maintain its profitability. The company reports first-quarter 2022 results before markets open on Tuesday.

Of 21 analysts covering the stock, 11 rate the shares a Buy or Strong Buy and nine more have Hold ratings. At a price of around $144.30, the implied gain based on a median price target of $159 is 10.2%. At the high price target of $167, the implied gain is 15.7%.

Analysts anticipate P&G will report first-quarter fiscal 2022 revenue of $19.83 billion, up 4.7% sequentially and 2.6% year over year. Adjusted EPS are pegged at $1.58, up 40% sequentially and up 3% year over year. For the full fiscal year, current estimates call for EPS of $5.93, up 4.8%, on sales of $78.9 billion, up 3.7%.

Shares trade at 24 times expected 2022 EPS, 22.4 times estimated 2023 earnings and 21 times estimated 2024 earnings. The stock’s 52-week range is $121.54 to $147.23. P&G pays an annual dividend of $3.48 (yield of 2.45%).

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