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Earnings Previews: Lockheed Martin, NextEra Energy, Raytheon, Verizon

Fourth-quarter revenue is forecast to come in at $5.8 billion, up 32.8% sequentially and 31.8% year over year. Adjusted EPS are forecast to be lower sequentially by 47.2% at $0.40, which would be flat year over year. For the full year, current estimates call for EPS of $2.52, up 9.2%, on sales of $18.48 billion, up 2.7%.

NextEra shares trade at 32.7 times expected 2021 EPS, 30.1 times estimated 2022 earnings of $2.74 and 27.9 times estimated 2023 earnings of $2.96 per share. The stock’s 52-week range is $68.33 to $93.73, and NextEra pays an annual dividend of $1.54 (yield of 1.86%). Total shareholder return over the past 12 months was 0.71%.

Raytheon

Raytheon Technologies Corp. (NYSE: RTX) has seen its share price increase by about 31% over the past 12 months. The company was the second-largest federal contractor in 2020, with $28.2 billion in committed dollars (4.95% of all federal contract spending) and the second-largest defense contractor with $27.4 billion in obligated dollars (7.47% of all defense dollars). The stock posted an all-time high one week ago but has sagged since.

Of 20 analysts covering the stock, 15 rate the shares a Buy or Strong Buy, and the other five have Hold ratings. At a share price of around $88.40, the upside potential based on a median price target of $105 is nearly 20%. At the high price target of $111, the upside potential is 25.6%.

Analysts expect Raytheon to report fourth-quarter revenue of $17.26 billion, up 6.5% sequentially and 5.1% year over year. Adjusted EPS are expected to reach $1.02, down 18.8% sequentially but up by 37.8% year over year. For the full year, EPS are pegged at $4.22, up 20.5%, on revenue of $64.63, up 1.9%.

Raytheon stock trades at 20.9 times expected 2021 EPS, 17.8 times estimated 2022 earnings of $4.97 and 14.9 times estimated 2023 earnings of $5.94 per share. The stock’s 52-week range is $65.02 to $92.48. Raytheon pays an annual dividend of $2.04 (yield of 2.31%). Total shareholder return over the past 12 months was 32.9%.

Verizon

Telecom giant and Dow Jones industrials component Verizon Communications Inc. (NYSE: VZ) has dropped 2.1% over the past 12 months. The stock fell by 11.5% in 2021. Verizon made the list as one of 2022’s Dogs of the Dow.

Verizon and AT&T recently agreed to delay implementation of their 5G C-band (Ultra Wideband as Verizon calls it) rollout following a Federal Aviation Administration warning of interference with some airplane radar systems. About 10 million people of a planned 100 million will experience the delay. Verizon spent more than $45 billion last year to acquire C-band spectrum for its network.

While analysts are definitely cool toward Verizon’s potential to grow its share price, the company’s massive dividend yield makes it hard to recommend selling the stock. Of 29 analysts, seven rate the stock as a Buy or Strong Buy and 21 rate the shares at Hold. At a share price of around $53.50, the implied gain based on a median price target of $59 is 10.3%. At the high price target of $71, the potential upside is 32.7%.

Fourth-quarter revenue is forecast to come in at $33.92 billion, up about 3% sequentially but down 2.2% year over year. Adjusted EPS are forecast at $1.29, down 8.9% sequentially and up 6.6% year over year. For full fiscal 2021 year, analysts expect Verizon to post EPS of $5.38, up 9.8%, on sales of $133.34 billion, up 3.9%.

Verizon stock trades at 9.9 times expected 2021 EPS, 9.9 times estimated 2022 earnings of $5.39 and 9.7 times estimated 2023 earnings of $5.51 per share. The stock’s 52-week range is $49.69 to $59.95. Verizon pays an annual dividend of $2.56 (yield of 4.79%). Total shareholder return over the past 12 months was negative 2.3%.

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