Investing

Earnings Previews: Halliburton, Johnson & Johnson, Lockheed Martin, Truist

Paul Ausick

Published: April 15, 2022 6:37 am

Before markets opened Wednesday, JPMorgan beat a modest revenue estimate and missed on profits. The stock closed down more than 3% for the day. Delta Air Lines posted a tiny profit and a solid revenue beat to close up more than 6%. BlackRock missed the consensus revenue estimate but beat the earnings estimate by more than 7%. The shares closed down by less than 1%. Bed Bath & Beyond missed on both profits and revenues, and the stock closed down by just 1.2%.

We had previewed seven companies that reported results before markets opened Thursday. Taiwan Semiconductor beat both profit and revenue estimates and guided current quarter revenue higher. The stock added more than 4% on Wednesday and traded down about 1.7% in the late morning Thursday.

UnitedHealth also beat top-line and bottom-line estimates and raised full-year guidance, but not by enough to move the stock price much. Shares traded up by about 0.7% just before noon Thursday.

Wells Fargo missed on revenue but topped the earnings estimate by 10%. Shares were trading down by 3.3%.

Citigroup hammered the consensus profit estimate by 43% and also beat the revenue estimate, although year-over-year revenue was down by 2.6%. The stock traded up by about 1.9% in morning trading Thursday.

Goldman Sachs beat the consensus earnings estimate by $1.78 (19.8%) and the revenue estimate by 9.9%. Revenue fell by nearly 27% year over year, however. The stock traded down by about 0.2% Thursday morning.

Morgan Stanley beat the consensus earnings estimate by 17.4%, but revenue sank by nearly 6% year over year. The stock traded up by about 1.3% as the noon hour approached.

Rite Aid posted a much larger than expected loss but beat the revenue estimate and guided current year revenue in-line with expectations. Shares were up nearly 8% in premarket trading but fell back to a gain of just less than 1% in the late morning.

Just a reminder that U.S. markets are closed Friday and that there are no earnings releases scheduled. Here is our preview of four financial firms set to report results before markets open on Monday: Bank of America, BNY Mellon, Charles Schwab and Synchrony.

Here are previews of four companies set to report results before Tuesday’s opening bell.

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Goldman Sachs Has 5 Stocks Rated Buy Under $10 With 75% to 500% Upside Potential

Halliburton

Oilfield services firm Halliburton Co. (NYSE: HAL) has seen its share price nearly double over the past 12 months. Virtually all the growth has come since early December. Halliburton and rivals Schlumberger and Baker Hughes have all suspended their operations in Russia following the invasion of Ukraine. The suspension is the least costly to Halliburton, which would have realized about 2% of 2022 revenue from its Russian business. Schlumberger and Baker Hughes would each have derived about 5% of estimated revenue from Russian operations.
Of 27 analysts covering Halliburton, 21 have given the shares a Buy or Strong Buy rating and four more have Hold ratings. At a recent price of around $40.20 a share, the stock had outrun its median price target of $38.00. At the high target of $50, the implied gain is about 25%.

First-quarter revenue is forecast to come in at $4.20 billion, which would be down 1.8% sequentially but up 21.7% year over year. Adjusted earnings per share (EPS) are forecast at $0.34, down 4.7% sequentially and up 79% year over year. For the full 2022 fiscal year, analysts are currently forecasting EPS of $1.80, up 66.4%, on sales of $18.31 billion, up 19.7%.

Halliburton stock trades at 22.4 times expected 2022 EPS, 16.6 times estimated 2023 earnings of $2.43 and 14.3 times estimated 2024 earnings of $2.81 per share. The stock’s 52-week trading range is $17.82 to $40.76, and the company pays an annual dividend of $0.18 (yield of 1.19%). Halliburton’s total shareholder return for the past year was 96.3%.

Johnson & Johnson

Over the past 12 months, pharmaceuticals giant and Dow Jones industrial average component Johnson & Johnson (NYSE: JNJ) has added about 14.6% to its share price. Earlier this week, a California appeals court cut the company’s fine for deceptive marketing of a vaginal mesh implant by $42 million, reducing the penalty to $303 million. New CEO Joaquin Duato is a 30-year company veteran who has predicted that the coming changes in health care in the next decade will be more transforming than all the improvements in the past century.

Of 19 brokerages covering the company, eight have Buy or Strong Buy ratings on the stock and 10 others rate the shares at Hold. At a share trading price of around $180.70, the upside potential based on a median price target of $182.00 is just 0.7%. At the high target of $215, the upside potential is 19%.

First-quarter revenue is forecast at $23.64 billion, down 4.7% sequentially and up 5.9% year over year. Adjusted EPS are expected to come in at $2.59, up 21.5% sequentially and flat year over year. For the full 2022 fiscal year, analysts expect EPS of $10.52, up 7.3%, on sales of $99.43 billion, up 6%.

Shares trade at 17.2 times expected 2022 EPS, 16.4 times estimated 2023 earnings of $11.02 and 15.9 times estimated 2024 earnings of $11.37 per share. The stock’s 52-week range is $155.72 to $184.20. The company pays an annual dividend of $4.19 (yield of 2.35%). Total shareholder return for the past year was 16.2%.

Lockheed Martin

Lockheed Martin Corp. (NYSE: LMT) is the country’s largest defense contractor, measured by federal dollars obligated in 2020. Some $75.2 billion was awarded to the company’s defense businesses that year, and Lockheed received 13.5% of all federal contract dollars in 2020 and 20.5% of defense dollars. Over the past 12 months, the company’s stock has added nearly 25%.
In February, Lockheed scrapped its planned acquisition of Aerojet Rocketdyne after the Federal Trade Commission unanimously voted to file a complaint to block the merger. In March, the Pentagon cut its fiscal year 2023 order for the company’s F-35 fighter jet from 94 to 61. That total is subject to more political wrangling, of course.

Just six of 17 brokerages have a Buy or Strong Buy rating on the stock, compared to 11 that rate the shares at Hold. At a share price of around $469.20, the company trades above its median price target of $466.00. At the high price target of $521.00, the upside potential is 11%.

First-quarter revenue is forecast at $15.49 billion, down 12.6% sequentially and 4.7% lower year over year. Adjusted EPS are expected to come in at $6.19, down 14.5% sequentially and 5.6% year over year. For full fiscal 2022, Lockheed is expected to post EPS of $26.79, down 2.5%, on sales of $666.11 billion, down 1.4%.

Lockheed stock trades at 17.5 times expected 2022 EPS, 16.5 times estimated 2023 earnings of $28.47 and 16.3 times estimated 2024 earnings of $28.81 per share. The stock’s 52-week range is $323.23 to $479.99, and Lockheed pays an annual dividend of $10.60 (yield of 2.39%). Total shareholder return over the past 12 months was 24.8%.

Truist

With a market cap of more than $69 billion, Truist Financial Corp. (NYSE: TFC), is the country’s fourth-largest regional bank. Since peaking in mid-January, the stock has dropped 22%, and over the past 12 months, the stock’s value has fallen by about 11%. The commercial bank posted a new 52-week low on Wednesday.

Truist’s downside risks include the imposition of a strict liquidity coverage ratio, tightening of regulations related to overdraft charges, and potential restrictions on capital distribution. It is worth noting that at the current share price, the stock’s dividend yield is quite high. But is it solid?

Sentiment on the stock is mixed, with 10 of 24 analysts giving the shares a Buy or Strong Buy rating and 12 rating the shares at Hold. At a share price of around $52.00, the upside potential based on a median price target of $64.50 is 24%. At the high price target of $77, the upside potential is about 48%.

Analysts expect first-quarter revenue of $5.48 billion, down 2.1% sequentially and about 0.5% lower year over year. Adjusted EPS are forecast at $1.11, down 19.6% sequentially and 5.9% year over year. For the full 2022 fiscal year, current estimates call for EPS of $4.89, down 11.6%, and revenue of $23.15 billion, up about 3.4%.

Truist stock trades at 10.6 times expected 2022 EPS, 9.2 times estimated 2023 earnings of $5.63 and 8.3 times estimated 2024 earnings of $6.30. The stock’s 52-week range is $51.66 to $98.95, and the bank pays an annual dividend of $1.86 (yield of 3.69%). Total shareholder return for the past 12 months was negative 9.1%.