Investing

Earnings Previews: American Express, Cleveland-Cliffs, Intel, Schlumberger

Of nearly 40 companies in our watch list that reported earnings late Tuesday or before markets opened Wednesday, six posted a negative surprise on earnings and one met expectations exactly. Eleven missed revenue estimates and seven others hit sales estimates exactly. A little more diverse than Monday evening/Tuesday morning results, but still heavily weighted toward upside surprises.

We have already previewed four companies scheduled to report September quarter results after markets close Wednesday (IBM, Kinder Morgan, Las Vegas Sands and Tesla) and four more set to report before markets open again Thursday (American Airlines, AT&T, Freeport-McMoRan and Southwest Airlines).

Here’s a look at four firms reporting quarterly results after markets close Thursday or before they reopen on Friday.

American Express

Financial services giant and Dow Jones industrial average component American Express Co. (NYSE: AXP) has posted a 12-month share-price increase of nearly 71%, even including a two-month dip that bottomed out in mid-September. Amex reports quarterly results before markets open Friday morning.

In the second quarter, Amex issued a company record of 2.4 million new credit cards and said it expected continued growth in its core business. A week ago, analysts at JPMorgan threw a little shade on that outlook, citing rising marketing and promotions costs for the bank’s own credit card business.

Analysts have taken a wait-and-see position on the company’s stock. Of 27 brokerages covering the firm, 14 have put a Hold rating. Another 11 have given Amex a Buy or Strong Buy rating. At a recent price of $177.30, the implied gain based on a median price target of $180 is about 1.5%. At the high price target of $215, the upside potential rises to 21.3%.

Third-quarter revenue is forecast to rise nearly 3% sequentially to $10.55 billion, which would be a jump of more than 20% year over year. Adjusted earnings per share (EPS) are pegged at $1.75, down more than 37% sequentially but up nearly 35% year over year. For full fiscal 2021, current estimates call for EPS of $8.79, up 133%, on revenue of $41 billion, up 13.7%.

The stock trades at 20.2 times expected 2021 EPS, 18.8 times estimated 2022 earnings and 16.1 times estimated 2023 earnings. The stock’s 52-week range is $89.11 to $179.67, and American Express pays an annual dividend of $1.72 (yield of 0.97%).

Cleveland-Cliffs

By mid-August, iron ore miner and steelmaker Cleveland-Cliffs Inc. (NYSE: CLF) had more than tripled its share price since October of last year. The stock remains 176% above that level, but the outlook is a bit murkier than it was when iron ore prices were soaring. Iron ore prices peaked in mid-July and have declined by more than $100 per ton since then to trade at around $115 currently.

Cliffs’ acquisitions of AK Steel and Arcelor Mittal’s U.S. steelmaking operations have driven more revenue and virtually overnight changed the company from a producer of iron ore. In the 2020 June quarter, 34% of revenue was down to iron products. In the June quarter of this year, just 3% was attributed to iron products.

Cliffs also got a share-price boost in late January when meme stock investors basically doubled the stock’s price between last November and mid-January. Cliffs is scheduled to report third-quarter results first thing on Friday.

The stock gets only moderate attention from analysts. Of nine brokerages covering the stock, five had a Buy or Strong Buy rating, and the other four rate the stock at Hold. At a price of around $21 a share, the implied gain based on a median price target of $24 is 14.3%. At the high price target of $38, the upside potential is nearly 81%.

Analysts are forecasting third-quarter revenue of $5.63 billion, nearly 12% higher sequentially and up more than 240% year over year. Adjusted EPS are forecast at $2.23, up 56% sequentially and up from $0.04 per share in the year-ago quarter. For the full fiscal 2021, analysts currently expect the company to report EPS of $6.25, compared to a loss of $0.47 per share last year, on sales of $20.55 billion, up more than 280%.

The stock trades at 3.4 times expected 2021 EPS, 5.2 times estimated 2022 earnings and 8.7 times estimated 2023 earnings. The stock’s 52-week range is $7.59 to $26.51, and the company does not pay an annual dividend.