Investing

Earnings Previews: Apple, Robinhood, US Steel, Visa

Paul Ausick

Published: January 26, 2022 11:22 am

Companies beating earnings and revenue estimates far outnumber those that missed late Tuesday. The gap narrowed a little among companies reporting before markets opened on Wednesday, but the margin remained more than two to one.

Microsoft beat the revenue estimate by about $1.3 billion and the per-share earnings estimate by nearly 7%, and shares traded higher by around 5% shortly after the opening bell. Texas Instruments beat the earnings estimate by 16% and the revenue estimate by 9%, and it was also trading up by around 5%.

Among companies reporting before the opening bell Wednesday, AT&T beat on both the top and bottom lines, while Boeing missed on both. Both stocks traded higher, however.

We have already previewed four companies reporting results after markets close on Wednesday (Intel, Lam Research, Las Vegas Sands and Tesla), along with previews of four more reporting results before Thursday’s opening bell (Altria, Comcast, McDonald’s and Southwest Airlines).

Here is a look at four firms scheduled to report results late on Thursday.

Apple

Even including a recent slide in its share price, Apple Inc. (NASDAQ: AAPL) has posted a gain of about 15.6% over the past 12 months. For the 2021 calendar year, Apple’s stock rose by nearly 35%. When the company reported fiscal fourth-quarter results last October, it warned that it faced a revenue headwind of about $6 billion in the December quarter related to supply chain issues. That may turn out to have been an optimistic forecast. While investor reaction may be negative initially, Apple’s long-term prospects remain solid.

Of 43 analysts covering Apple, 34 give the stock a rating of Buy or Strong Buy, and another seven rate the shares at Hold. At a recent share price of around $159.80, the upside potential based on a median price target of $184.50 is about 15.5%. At the high price target of $226, the upside potential is more than 41%.

Analysts expect the Dow Jones industrial average component to report first-quarter fiscal 2022 revenue of $118.53 billion. That would be 42.2% higher sequentially and up 6.4% year over year. Adjusted earnings per share (EPS) are expected to come in at $1.89, up 52.2% sequentially and 5.6% higher year over year. For the full fiscal year ending in September, analysts expect the company to report EPS of $5.72, up 2%, on sales of $381.83 billion, up about 4.4%.

Apple stock trades at about 27.9 times expected 2022 EPS, 25.9 times estimated 2022 earnings of $6.16 and 24.5 times estimated 2023 earnings of $6.52 per share. The stock’s 52-week range is $116.21 to $182.94. Apple pays an annual dividend of $0.88 (yield of 0.55%). Total shareholder return for the past 12 months was 12.3%.

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Robinhood

Within a week of its initial public offering in late July, shares of Robinhood Markets Inc. (NASDAQ: HOOD) doubled in price. As of Tuesday’s close, the stock traded down more than 62% below its IPO price.

The last Buy rating issued on the stock came in late August. Since then, analysts are keeping their powder dry. An SEC investigation into so-called behavioral prompts may conclude with a recommendation requiring trading app developers like Robinhood to disclose more information to investors, complicating their businesses and opening them up to more legal action.
Just 14 brokerages cover the stock. Of those, six have a Buy or Strong Buy rating on the shares and six more rate the stock at Hold. At a share price of around $13.50, the upside potential to the median price target of $25 is about 85%. At the high price target of $58, the upside potential is a whopping 330%.

For the first quarter of fiscal 2022, revenue is forecast at $443.93 million. Analysts are looking for an adjusted loss per share of $0.18. For the full fiscal year, current consensus estimates call for an adjusted loss per share of $0.23, far below the 2021 fiscal year loss of $10.76 per share. Revenue is forecast at $2.28 billion, up 25%.

Robinhood is not expected to post a profit in 2022 or 2023. Based on estimated EPS of $0.26 in 2024, the price multiple for that year is 51.3. The stock’s post-IPO range is $11.15 to $85.00. The company does not pay a dividend.

U.S. Steel

Over the past 12 months, shares of United States Steel Corp. (NYSE: X) are essentially flat. The stock added nearly 52% to its share price in 2021 but has dropped by 25% since January 12. Steel demand is expected to weaken this year after China indicated that it will try to keep production flat this year in an effort to support better pricing. To support even that level of production, China must curb its imports and expand its exports. That’s not good news for other steel producers.

U.S. Steel is not covered by many analysts. Of 12 brokerages covering the shares, only four rate the stock a Buy or Strong Buy. That’s equal to the number giving the stock a Sell or Strong Sell rating, and the number that rate the stock at Hold. At a share price of around $19.00, the upside potential to a median price target of $26.50 is 39.5%. At the high target of $50, the upside potential is 163%.

Fourth-quarter revenue is expected to come in at $5.35 billion, down 10.3% sequentially but up 109% year over year. Adjusted EPS are forecast at $4.25, down 21.6% sequentially and far better than the year-ago quarterly loss of $0.27. For the 2021 fiscal year, analysts expect U.S. Steel to post EPS of $14.32, compared to the year-ago loss of $4.67, on sales of $20.16 billion, up 107%.

U.S. Steel stock trades at about 1.3 times expected 2021 EPS, 2.1 times estimated 2022 earnings of $9.14 and 6.5 times estimated 2023 earnings of $2.91 per share. The stock’s 52-week range is $16.13 to $30.57, and the company pays an annual dividend of $0.20 (yield of 1.03%). Total shareholder return for the past 12 months was just over 5%.

Visa

The other Dow component reporting after markets close Thursday is credit card issuer Visa Inc. (NYSE: V). Over the past 12 months, the stock price has appreciated by about 3.5%, but it has sagged by more than 19% since late July. Investors’ spirits could be rising, given the strong showing when American Express reported quarterly results Tuesday morning.

Analysts are strongly bullish on the stock, with 31 of 35 brokerages rating the shares a Buy or Strong Buy. The other four have a Hold rating on the stock. At a share price of around $206.80, the implied gain based on a median price target of $275 is about 32.9%. At the high price target of $308, the upside potential is nearly 49%.

For Visa’s first quarter of fiscal 2022, revenue is forecast at $6.79 billion, up 5.0% sequentially and 19.7% year over year. Adjusted EPS are forecast at $1.70, up 3.1% sequentially and 19.7% year over year. For the full fiscal year, current consensus estimates call for EPS of $7.04, up 19.8%, on revenue of $28.22 billion, up 17%.

Visa stock trades at about 29.3 times expected 2022 EPS, 24.5 times estimated 2023 earnings of $8.43 and 21.2 times estimated 2023 earnings of $9.73 per share. The stock’s 52-week range is $190.10 to $252.67. Visa pays an annual dividend of $1.50 (yield of 0.74%). Total shareholder return for the past 12 months was 3%.