Investing

Earnings Previews: Caterpillar, Chevron, Phillips 66, Weyerhauser

Paul Ausick

Published: January 26, 2022 1:35 pm

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%.
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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%.
Fourth-quarter revenue is forecast at $44.25 billion, up 1.1% sequentially and 79% year over year. Adjusted EPS are forecast at $3.13, up 5.7% sequentially and far above the year ago’s loss of $0.01 per share. For the full 2021 year, analysts expect Chevron to post EPS of $8.61, compared to a loss per share of $0.20 in 2020, on revenue of $159 billion, up 67.9%.

Chevron stock trades at about 15.6 times expected 2021 EPS, 13.1 times estimated 2022 earnings of $10.20 and 13.8 times estimated 2023 earnings of $19.77 per share. The stock’s 52-week range is $84.57 to $134.51. The high was posted Wednesday morning. Chevron pays an annual dividend of $5.36 (yield of 4.04%). Total shareholder return for the past 12 months was 58.1%.
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Phillips 66

Typically, when oil prices rise, independent refiners’ stocks move in the opposite direction. The country’s second-largest refiner, by market cap, is Phillips 66 (NYSE: PSX), and its shares have added about 123% since tumbling to a trough in March of 2020, about 25% less than Chevron’s share price increase for the same period. However, since the end of 2021, Phillips 66 stock has jumped by nearly 19% compared to Chevron’s gain of around 13%.

The refiner’s stock jumped when the Biden administration reduced the ethanol blending requirements for 2021 in December. Now the administration is considering rolling back its 15 billion gallon requirement for 2022. That could further enhance the company’s share price.

Analysts remain mostly bullish on the stock, with 15 of 18 rating it a Buy or Strong Buy. The other three rate the shares at Hold. At a share price of around $86.60, the upside potential based on a median price target of $95 is 9.7%. At the high price target of $107, the upside potential is 23.6%.

The consensus estimate for fourth-quarter revenue is $27.12 billion, down nearly 14% sequentially but up 61.7% year over year. Adjusted EPS are forecast at $1.93, down 39.4% sequentially and up from a loss per share of $1.16 in the year-ago quarter. For the full fiscal 2021, analysts are looking for EPS of $4.41, up from a loss per share of $0.89 in 2020, and revenue of $108.4 million, up 65.5%.

Phillips 66 stock trades at about 19.6 times expected 2021 EPS, 11.8 times estimated 2022 earnings of $7.29 and 12.1 times estimated 2023 earnings of $7.13 per share. The stock’s 52-week range is $63.19 to $94.34. Phillips 66 pays an annual dividend of $3.68 (yield of 4.28%). Total shareholder return for the past 12 months was 26.8%.

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Weyerhaeuser

Lumber and wood products giant Weyerhaeuser Co. (NYSE: WY) has had an up and down 12 months. The stock reached a peak in early May, dropped the entire gain by mid-July, and posted a new 52-week high just two weeks ago. Lumber prices have fallen from a recent peak of $1,340 per contract to just over $1,000, signaling perhaps that rising costs and supply chain issues will stifle demand. Early last year, rising costs did nothing but lift demand. How times change.

Analysts have not shown much interest in Weyerhaeuser. Just 10 cover the stock and of those, eight have rated the stock a Buy or Strong Buy. The other two have Hold ratings. At a share price of around $38.90, the implied upside based on a median price target of $44 is about 13%. At the high target of $50, the implied upside is 28.5%.

Revenue for the fourth quarter of fiscal 2021 is forecast at $2.17 billion, down 7.4% sequentially and up 5.3% year over year. Adjusted EPS are forecast at $0.48, down 19.8% sequentially and flat year-over-year. For the full fiscal year, EPS are forecast at $3.37, up 161% year over year, on sales of $10.14 billion, up 34.6%.

Weyerhaeuser shares trade at about 11.5 times expected 2021 earnings, 17.5 times estimated 2022 earnings of $2.23 and 20.6 times estimated 2023 earnings of $2.55. The stock trades in a 52-week range of $30.87 to $41.80. The company pays an annual dividend of $0.68 (yield of 1.75%). Total shareholder return for the past 12 months was 21.2%.