Investing

Earnings Previews: Caterpillar, Comcast, Linde, Sirius XM

Paul Ausick

Published: October 26, 2021 12:43 pm

Nearly 80 companies in our watch list reported earnings after markets closed Monday and before they opened again on Tuesday. Of those, 20 missed consensus earnings estimates and 21 missed revenue estimates.

After markets close Tuesday, we’ll hear from half a dozen companies: Alphabet, AMD, Microsoft, Robinhood, Twitter and Visa. On Wednesday morning, reports are due from four more companies we follow: Boeing, Coca-Cola, GM and McDonald’s.
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We also have previewed three companies set to report results after markets close Wednesday: eBay, Ford and Teladoc.

Here’s a look at four companies scheduled to report results before markets open Thursday.

Caterpillar

After setting a new 52-week high in June, shares of heavy equipment maker Caterpillar Inc. (NYSE: CAT) have retreated 16%. For the past 12 months, the shares are up about 22.5%. The Dow Jones industrial average component has become more capital-efficient in the past few years, but an uncertain future for the construction industry in China and whatever the U.S. Congress decides to spend on infrastructure will have a lot to do with investor enthusiasm for Caterpillar stock.

Probably the best way to describe analyst sentiment for the stock is “wait and see.” Of 29 brokerages covering the shares, 15 have put a Hold rating on the stock. Another 12 rate the stock a Buy or Strong Buy. At the recent price of around $201.70, the upside potential based on a median price target of $232 is 15%. At the high target of $301, the upside potential is 49%.

Caterpillar is expected to report third-quarter revenue of $12.46 billion, which would be down 3.4% sequentially but up 26% year over year. Adjusted earnings per share (EPS) are forecast at $2.21, down 15.2% sequentially and up 65% year over year. For the full fiscal year, analysts currently expect EPS of $10.03, up 53%, on revenue of $50.17 billion, up 20%.

The stock trades at 20.0 times expected 2021 EPS, 16.5 times estimated 2022 earnings and 14.2 times estimated 2023 earnings. The stock’s 52-week range is $149.63 to $246.69. Caterpillar pays an annual dividend of $4.44 (yield of 2.21%).

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Comcast

Since early September, Comcast Corp. (NASDAQ: CMCSA) has seen its share price fall by about 41%. Netflix stock has appreciated by around 55% over the same period. Comcast’s businesses continue growing, but the growth has been hampered by rising costs and other expenses. Keep an eye on free cash flow, which was down slightly in the second quarter. That will determine whether dividends or buybacks are in investors’ future.

Analysts are decidedly bullish on the stock, with 29 of 36 giving the shares a Buy or Strong Buy rating and another six having a Hold rating. At a price of around $54.30, the upside potential based on a median price target of $67 is 23.4%. At the high price target of $75, the upside potential is 38%.
Third-quarter revenue is forecast to come in at $29.85 billion, up 4.6% sequentially and 17% year over year. Adjusted EPS are forecast at $0.76, down 10% sequentially and up 17% year over year. For the full year, analysts are expecting Comcast to report EPS of $3.11, up 19%, on sales of $115.31, up 11.3%.

Comcast stock trades at 17.4 times expected 2021 EPS, 14.4 times estimated 2022 earnings and 12.9 times estimated 2023 earnings. The stock’s 52-week range is $40.97 to $61.80. Comcast pays an annual dividend of $1.00 (yield of 1.85%).
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Linde

Since posting a 52-week low in late October of last year, chemicals company Linde PLC (NYSE: LIN) has added 48% to its share price. Among the smorgasbord of chemicals the company produces, the most interesting may be green hydrogen. The U.K.-based company’s market cap is nearly $165 billion, and its green hydrogen plan is the world’s largest facility of its kind. We included it on our list earlier this month of hydrogen stocks to buy.

No analyst has a Sell rating on the stock, and 11 of the 22 brokerages covering the stock have Buy or Strong Buy rating on the shares. At a price of around $318.60, the upside potential based on a median price target of $340 is 6.7%. At the high target of $390, the upside potential is 22%.

Linde is expected to report third-quarter revenue of $7.54 billion, down less than 1% sequentially and up 9.9% year over year. EPS are forecast at $2.66, 1.4% lower sequentially and up 23.7% year over year. For the full year, analysts expect the company to report EPS of $10.36, up 24%, on sales of $29.94 billion, up 9.9%.

The stock trades at 30.3 times expected 2021 EPS, 27.5 times estimated 2022 earnings and 24.9 times estimated 2023 earnings. The stock’s 52-week range is $214.14 to $319.11, and the high was posted Tuesday morning. Linde pays an annual dividend of $4.24 (yield of 1.34%).

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Sirius XM

Satellite radio provider Sirius XM Holdings Inc. (NASDAQ: SIRI) has seen its share price take big swings over the past 12 months. At one point, the shares were up nearly 20%. Currently, the gain is a relatively meager 2.3%.

Tuesday morning, Sirius XM raised its quarterly dividend from $0.015 to $0.022, a jump of around 50%. Free cash flow more than doubled in the second quarter to $550 million, the metric the company said it had confidence in its ability to grow in the coming years. Investors like to hear that kind of talk from company executives, but Sirius XM’s stock is up less than 1% since the announcement. The company is also buying back stock, but it needs to come up with a way to boost its share price. The stock’s total 12-month return is an undistinguished 5.67%.

Of 15 brokerages covering the stock, nine rate the shares a Buy or Strong Buy, and another five rate the shares at Hold. At a price of around $6.10 per share, the potential upside based on a median price target of $7.50 is about 23%. At the high price target of $10, the upside potential is 39%.

The consensus estimate calls for third-quarter revenue of $2.17 billion, up less than 1% sequentially, and 7.5% year over year. Adjusted EPS are pegged at $0.07, down nearly 7% (one penny) sequentially and up a penny year over year. For the full fiscal year, Sirius XM is expected to report EPS of $31, up 22.7%, on revenue of $8.59 billion, up 6.9%.

The stock trades at 19.8 times expected 2021 EPS, 16.9 times estimated 2022 earnings and 15.4 times estimated 2023 earnings. The stock’s 52-week range is $5.67 to $8.14, and the current annual dividend is about $0.06 (yield of 0.96%).