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Earnings Previews: Alphabet, Chipotle Mexican Grill, Microsoft, Visa

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This promises to be a busy week for March-quarter earnings. More than a thousand U.S.-traded firms are scheduled to report results this week, including some of the country’s largest tech and energy firms.
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Before markets opened on Monday, Otis Worldwide beat analysts’ profit estimates while missing on expected revenue. The elevator maker also narrowed its fiscal year earnings per share (EPS) forecast range and lowered its forecast revenue range. Shares traded up about 2.2% shortly after the opening bell.

Activision Blizzard missed on EPS and revenue, but Microsoft still has the $95.00 per share offer on the table so the stock is down less than 1%. Coca-Cola beat both top-line and bottom-line estimates and left its guidance unchanged. The stock was trading up by about 1.8% in the early going Monday.

Before markets open on Tuesday, we shall hear from eight companies we already have previewed. ADM, Corning, D.R. Horton and PepsiCo were covered in one story, and GE, Raytheon, UPS and Valero in another. Earlier in the morning, we previewed four companies set to report results late Tuesday: Enphase Energy, GM, QuantumScape and Texas Instruments.

Here is a look at four more firms set to report results after markets close Tuesday.

Alphabet

Since posting a 52-week high in mid-November, Alphabet Inc. (NASDAQ: GOOGL) shares have declined by 20.6%. Analysts and investors are concerned that ad revenue will stall as a result of inflation and the overall macroeconomic outlook. Over the past weekend, the 27 members of the European Union signed a new Digital Services Act that bans certain types of advertising and requires websites to label clearly promotional content. Violations could cost companies up to 6% of their global revenue. The new rule takes effect in 2024.

Analysts, however, remain universally bullish on the stock. All 50 brokerages covering the stock have a Buy or Strong Buy rating on the stock. At a recent share price of around $2,392.30, the upside potential based on a median price target of $3,475.00 is 45.3%. At the high price target of $3,850.00, the upside potential is nearly 61%.

First-quarter revenue is forecast at $67.8 billion, down 10.0% sequentially but up 22.6% year over year. Adjusted EPS are pegged at $25.55, down 16.8% sequentially and 2.7% lower year over year. For the full 2022 fiscal year, current consensus estimates call for EPS of $115.52, up 3%, on revenue of $302.67, up 17.5%.
Alphabet stock trades at 20.7 times expected 2022 EPS, 17.6 times estimated 2023 earnings of $135.59 and 15.6 times estimated 2024 earnings of $153.68. The stock’s 52-week range is $2,230.05 to $3,0042.00. The company does not pay a dividend, and the total shareholder return for the past 12 months is 5.5%.
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Chipotle Mexican Grill

Shares of fast-food chain Chipotle Mexican Grill Inc. (NYSE: CMG) have dipped by nearly 2% over the past 12 months. Since reaching a high in late September, the shares have dropped by almost 24%. Last year’s first-quarter sales were hobbled by limited availability of COVID-19 vaccines. This year, sales are expected to improve sharply, but inflation, rising costs and the global economy may have stunted year-over-year growth for the quarter. The situation is not improving much and threatens sales and profits for the rest of the year.

Of 33 analysts following the stock, 24 have a Buy or Strong Buy rating and the other nine rate the shares at Hold. At a share price of around $1,480.90, the stock’s upside potential based on a median price target of $1,900.00 is 28.3%. At the high price target of $2,500.00, the implied upside is 68.8%.

Analysts expect the restaurant chain to post first-quarter revenue of $2.01 billion, up 2.3% sequentially and 15.5% year over year. Adjusted EPS are expected to come in at $5.64, up 1.1% sequentially and 5.2% higher year over year. For full fiscal 2022, analysts are looking from EPS of $31.59, up 24.3% year over year, with revenue up 15.5% to $8.71 billion.

Chipotle’s stock trades at around 46.9 times expected 2022 EPS, 35.4 times estimated 2023 earnings of $41.78 and 28.5 times estimated 2024 earnings of $51.89. The stock’s 52-week range is $1,277.41 to $1,958.55. The company does not pay a dividend. Total shareholder return for the past 12 months was essentially flat.

Microsoft

Over the past 12 months, Microsoft Corp. (NASDAQ: MSFT) has added about 6% to its share price. The Dow Jones industrial stock’s big attraction is its ability to generate cash. In the past four quarters, Microsoft’s operating cash flow totaled $83.9 billion. Free cash flow over that period totaled $60.7 billion. Total cash and investments summed to $125.3 billion at the end of the December quarter. Microsoft can easily handle its proposed all-cash acquisition of Activision Blizzard for around $75 billion and another 10% increase in its dividend wouldn’t cause any pain either.

Sentiment for the stock is virtually all positive. Of 47 analysts covering the stock, all but one have a Buy or Strong Buy rating, and the lone dissenter rates the stock at Hold. At a share price of around $274.00, the potential upside based on a median target of $368.00 is about 34.3%. At the high target of $411.00, the implied gain is 50%.
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For its third quarter of fiscal 2022, revenue is forecast at $49.05 billion, down about 5.2% sequentially but up 17.6% year over year. Adjusted EPS are forecast at $2.20, down 11.4% sequentially and up 12.8% year over year. For the full fiscal year, current consensus estimates call for EPS of $9.44, up 18.4%, on revenue of $198.73 billion, up 18.2%.

Microsoft stock trades at 29.0 times expected 2022 EPS, 25.6 times estimated 2023 earnings of $10.71 and 22.0 times estimated 2024 earnings of $12.46 per share. The stock’s 52-week range is $238.07 to $349.67. Microsoft pays an annual dividend of $2.48 (yield of 0.91%). Total shareholder return over the past year was 7.4%.

Visa

Another Dow component reporting after markets close Tuesday is credit card issuer Visa Inc. (NYSE: V). Over the past 12 months, the stock price has declined by about 7.9% and dropped to a 52-week low in early March. Investors have not reacted with a vigorous lift to rival American Express’ solid earnings report last week, likely due to continued concerns about inflation and its impact on consumer spending.


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. At a share price of around $207.00, the implied gain based on a median price target of $272.50 is about 31.6%. At the high price target of $304.00, the upside potential is 46.9%.

For Visa’s second quarter of fiscal 2022, revenue is forecast at $6.82 billion, down 3.3% sequentially and up 19.0% year over year. Adjusted EPS are forecast at $1.65, down 8.7% sequentially and up 19.6% year over year. For the full fiscal year, current consensus estimates call for EPS of $7.07, up 19.6%, on revenue of $28.43 billion, up 17.9%.


Visa stock trades at 29.4 times expected 2022 EPS, 24.8 times estimated 2023 earnings of $8.37 and 21.4 times estimated 2023 earnings of $9.74 per share. The stock’s 52-week range is $186.67 to $252.67. Visa pays an annual dividend of $1.50 (yield of 0.72%). Total shareholder return for the past 12 months was negative 7.9%.

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