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Earnings Previews: American Express, Cleveland-Cliffs, Newmont, Schlumberger, Verizon

The shortage of rigs and labor brought on by the pandemic has left the services companies with significant pricing power until (or unless) they can ramp up to meet increased demand. Whatever happens, that ramp is not likely to be too steep.

Analysts remain bullish on the company. Of 30 brokerages covering the stock, 25 have a Buy or Strong Buy rating. The other five rate the stock at Hold. At a share price of around $42.05, the implied upside based on a median price target of $49.00 is 16.5%. At the high target of $56.00, the upside potential is 33.2%.

First-quarter revenue is forecast at $5.9 billion, down 5.2% sequentially and up 13% year over year. Adjusted EPS are forecast at $0.33, down nearly 20% sequentially and up more than 57% year over year. For the full 2022 fiscal year, analysts are expecting Schlumberger to post EPS of $1.87, up 45.7%, on sales of $25.98 billion, up 13.3%.

Schlumberger shares trade at 22.6 times expected 2022 EPS, 16.1 times estimated 2023 earnings of $2.62 and 13.7 times estimated 2024 earnings of $3.07 per share. The stock’s 52-week range is $24.52 to $46.27. Schlumberger pays an annual dividend of $0.50 (yield of 1.19%). Over the past 12 months, total shareholder return was 69.5%.

Verizon

Telecom giant and Dow component Verizon Communications Inc. (NYSE: VZ) has seen its share price fall by about 2.7% over the past 12 months. Since posting a 52-week low in early December, however, the shares are up about 11.6%, including another sharp drop in mid-March.

Now that rival AT&T has returned to its telecom roots after completing the spinoff of Warner Media, the two rivals will continue to slug it out, primarily on the basis of dividend payments (AT&T still tops Verizon, even after slicing its dividend). Cable operators like Comcast and Charter are also starting to encroach on the telecom giants’ wireless business with packages of broadband access plus wireless service that many consumers find compelling. Verizon plays in an expensive league, too, where costs for spectrum and infrastructure run into multiple billions annually.

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 28 analysts, nine have Buy or Strong Buy ratings on the stock, and 18 rate the shares at Hold. At a share price of around $54.20, the implied gain based on a median price target of $59.00 is 8.9%. At the high price target of $72.00, the potential upside is 32.8%.


First-quarter revenue is forecast to come in at $33.61 billion, down 1.3% sequentially but up 2.3% year over year. Adjusted EPS are forecast at $1.35, up 3% sequentially and up by the same amount year over year. For full fiscal 2022, analysts currently expect Verizon to post EPS of $5.44, up 1.0%, on sales of $137.26 billion, up 2.7%.

Verizon stock trades at 10.0 times expected 2022 EPS, 9.6 times estimated 2023 earnings of $5.63 and 9.3 times estimated 2024 earnings of $5.86 per share. The stock’s 52-week range is $49.69 to $59.85. Verizon pays an annual dividend of $2.54 (yield of 4.72%). Total shareholder return over the past 12 months was negative 2.6%.

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