Investing

Earnings Previews: ON Semiconductor, PG&E

More than 300 companies in our watch list reported earnings after markets closed Wednesday and before they opened again on Thursday. Of those, 47 missed consensus earnings estimates and 71 missed revenue estimates.

After markets close Thursday, we’ll get reports from four companies: Amazon, Apple, Starbucks and U.S. Steel. On Friday morning, reports are due from four more companies we follow: Cameco, Chevron, Exxon and Phillips 66.

There are no earnings report on the calendar for Friday afternoon. Here’s our look at two companies scheduled to report results before markets open on Monday, November 1.

ON Semiconductor

The past 12 months have been good for ON Semiconductor Corp. (NASDAQ: ON) and its investors. Shares have added about 87%, and the stock posted an all-time high in late September of nearly $50 a share. The chipmaker has beaten analysts’ revenue estimates in each of the past four quarters, but recent concerns related to long lead times for delivery, especially in the company’s automobile business, have kept the share price relatively flat for the entire third quarter.

Of the 30 analysts covering the stock, however, most are bullish, with 20 giving the stock a Buy or Strong Buy rating. Another eight rate the stock at Hold. At the recent price of around $47.20, the implied share price gain based on a median price target of $53 is 12.2%. At the high price target of $63, the implied gain is 33.5%.

Third-quarter revenue is forecast at $1.71 billion, which would be up 2.6% sequentially and up nearly 30% year over year. Adjusted earnings per share (EPS) are forecast at $0.73, up 16.5% sequentially and 170% year over year. For the full fiscal year, analysts are expecting EPS of $2.46, up 190%, on a sales jump of 25% to $6.58 billion.

The stock trades at 18.3 times expected 2021 EPS, 16.4 times estimated 2022 earnings and 15.1 times estimated 2023 earnings. The stock’s 52-week range is $23.86 to $49.78. The chipmaker does not pay a dividend.

PG&E

California utility PG&E Corp. (NYSE: PCG) filed for bankruptcy protection in January of 2019 and the bankruptcy court approved an $11 billion settlement 18 months later. But the damage to the utility’s stock was done in November 2018, when the company acknowledged its role in massive wildfires that killed dozens of people and caused tens of billions in damages. The stock traded at right around $47 a share and dropped to around $5 by January 2019.

Since the bankruptcy settlement, the stock has not traded much above its current level. Investors are probably wondering when PG&E will once again begin behaving like a utility and start paying dividends that have been suspended since late 2017.

Analysts are bullish on the stock, however, with 10 of 15 brokerages covering the company giving it a Buy or Strong Buy rating and the rest rating the shares at Hold. At a price of around $11.50, the upside potential based on a median price target of $14 is nearly 22%. At the high price target of $17, the upside potential is about 48%.

Third-quarter revenue is forecast at $5.02, down 3.8% sequentially but up about 2.9% year over year. Adjusted EPS are pegged at $0.25, down 5.6% (two cents) sequentially and up 13.6% (three cents) year over year. For the full fiscal year, analysts expect PG&E to post EPS of $0.99, which would be 38% lower, on revenue of $19.75 billion, about 7% higher.

The stock trades at 11.6 times expected 2021 EPS, 10.3 times estimated 2022 earnings and 9.2 times estimated 2023 earnings. The stock’s 52-week range is $8.24 to $12.91. PG&E does not pay a dividend, and the average daily trading volume is just over 19 million shares.