Investing

Earnings Previews: Caterpillar, Chevron, Phillips 66, Weyerhauser

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).¬†Earlier, we previewed four companies reporting quarterly results later on Thursday (Apple, Robinhood, U.S. Steel and Visa).

Here is a look at four firms scheduled to report results first thing on Friday.

Caterpillar

After setting a new 52-week high in June, shares of heavy equipment maker Caterpillar Inc. (NYSE: CAT) have dropped by nearly 11%. For the past 12 months, the shares are up about 18%. The Dow Jones industrial average component has become more capital-efficient in the past few years, but rising costs may outrun the company’s ability to raise prices. On Monday, analysts at Oppenheimer reiterated a Buy rating on competitor Deere and raised the price target from $395 to $425. Deere’s target is nearly a third higher than Caterpillar’s, and Deere’s price multiples are also lower.

Of 29 brokerages covering the shares, 12 have put a Hold rating on the stock, while 14 rate it at Buy or Strong Buy. At the recent share price of around $216.90, the upside potential based on a median price target of $240 is 10.7%. At the high target of $349, the upside potential is above 60%.

Caterpillar is expected to report fourth-quarter revenue of $13.22 billion, which would be up 6.7% sequentially and 17.7% higher year over year. Adjusted earnings per share (EPS) are forecast at $2.26, down 15% sequentially but up 6.6% year over year. For the full 2021 fiscal year, analysts are expecting EPS of $10.36, up 58%, on revenue of $50.41 billion, up 20.8%.

Caterpillar stock trades at about 21 times expected 2021 EPS, 17.5 times estimated 2022 earnings of $12.39,and 14.3 times estimated 2023 earnings of $15.18. The stock’s 52-week range is $179.34 to $246.69. Caterpillar pays an annual dividend of $4.44 (yield of 2.07%). Total shareholder return for the past 12 months was 18.4%.

Chevron

Over the past 12 months, shares of Chevron Corp. (NYSE: CVX) have risen by about 55%, including a jump of more than 40% since late September. Rising crude oil prices and a close watch on capital spending will keep Chevron on the good side of investors who also like the stock’s healthy dividend. Independent producers are seeing share prices go through the roof on higher energy prices and cost-saving measures that have allowed the smaller companies to raise payouts to shareholders.

There are no Sell ratings from any of the 30 analysts covering the stock. Eight Hold ratings are offset by 22 Buy or Strong Buy ratings on the shares. At a share price of around $133.90, the upside potential based on a median price target of $140 is 4.6%. At the high price target of $167, the upside potential is nearly 25%.

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