The three major U.S. equity indexes closed lower Monday, as equities tumbled following the report on home building release. The Dow Jones industrials closed down 0.7%, while the S&P 500 and the Nasdaq arch dipped by 0.8%. Eight of 11 S&P sectors closed lower. Health care (down 2.1%) and utilities (down 1.4%) were the big losers, while energy (up 2.3%) got the biggest boost.
The Census Bureau’s report on housing starts is due Tuesday morning and is expected to show a month-over-month dip of about 50,000 new homes being built. In premarket action Tuesday morning, all three indexes traded up by less than 1%.
After markets closed Monday, IBM reported quarterly results that beat both profit and revenue estimates. While Big Blue said its outlook for the year’s second half remains unchanged, investors were not impressed. Shares traded down more than 7% Tuesday morning.
Before markets opened on Tuesday, Johnson & Johnson reported better-than-expected earnings and revenue while slightly trimming full fiscal year guidance. Shares were up about 1% or so early Tuesday.
Lockheed Martin did not meet consensus expectations on either revenue or earnings. The defense contractor also reduced guidance, sending the shares down more than 1%.
Halliburton beat consensus estimates on both the top and bottom lines. The stock traded up almost 2% early Tuesday.
Truist Financial reported that it beat top-line and bottom-line estimates. Shares traded up less than 1%.
Our preview of companies reporting results late Tuesday or early Wednesday included Abbott Labs, ASML, Baker Hughes, Netflix and Omnicom.
Here is a look at five firms on deck to report results after markets close on Wednesday.
Kinder Morgan
Energy infrastructure company Kinder Morgan Inc. (NYSE: KMI) has added around 2% to its share price over the past 12 months. Shares plunged in the first half of June, though, dropping by 20%. The Federal Reserve’s 0.75-point interest rate hike, combined with the explosion of the Freeport LNG terminal, sent natural gas prices tumbling.
While Kinder Morgan and the other big pipeline operators are largely immune to commodity price risk, borrowing costs directly affect their ability to pay their nice dividends. And dividends are what Kinder Morgan investors want to see.
Of 21 brokerages covering Kinder Morgan, 14 have Hold ratings and just four have Buy or Strong Buy ratings. At a recent share price of around $17.00, the upside potential based on a median price target of $20.00 is 15%. At the high price target of $24.00, the implied upside is 41.2%.
Consensus estimates call for second-quarter revenue of $3.67 billion, would be down 14.4% sequentially but up 16.5% year over year, and adjusted earnings per share (EPS) of $0.26, down 18.3% sequentially and up 13.0% year over year. For the full 2022 fiscal year, analysts currently forecast EPS of $1.15, down 13.1%, on sales of $15.76 billion, down 5.1%.
Kinder Morgan stock trades at 14.8 times expected 2022 EPS, 14.1 times estimated 2023 earnings of $1.20 and 13.9 times estimated 2024 earnings of $1.22. The stock’s 52-week range is $15.01 to $20.20. Kinder Morgan pays an annual dividend of $1.11 (yield of 6.62%). Total shareholder return over the past 12 months was 2%.
Las Vegas Sands
Las Vegas Sands Corp. (NYSE: LVS) has surrendered about 27.5% of its value over the past 12 months. The stock’s 52-week high will be a year old later this week; the 52-week low was posted in mid-May. The company’s Macau property was closed for much of the second quarter, and while its Singapore property helped plug the hole, it was not enough. Analysts have set expectations accordingly, and any miss will levy a price on the shares.
Of 16 analysts covering the stock, 11 have rated the shares a Buy or Strong Buy. Another four have a Hold rating on the stock. At a share price of around $34.70, the upside potential based on a median price target of $43.00 is 23.9%. At the high price target of $59.00, the upside potential is 70%.
Analysts have a consensus second-quarter revenue estimate of $949.4 million, up 0.7% sequentially and 23.2% lower year over year. The consensus also calls for a loss per share of $0.28 in the quarter, compared to the prior quarter’s loss of $0.40 per share, and two cents more than the year-ago loss for the quarter. For the full fiscal year, Las Vegas Sands is expected to post a net loss of $1.03 per share, compared with a loss per share of $1.18 a year ago. Sales are forecast to rise by 13% to $4.78 billion.
Las Vegas Sands stock trades at 22.6 times expected 2023 earnings of $1.53 and 13.5 times estimated 2024 earnings of $2.57 per share. The stock’s 52-week range is $28.88 to $49.63, and Sands does not pay a dividend. Total shareholder return over the past year is negative 37.5%.
24/7 Wall St.Steel Dynamics
On April 21, Steel Dynamics Inc. (NASDAQ: STLD) posted an all-time high share price of just over $100. Since then, the stock price has dropped by 27%. At the same time, steel prices have dropped by about 25%. The COVID-19-related closures of Chinese steel mills are expected to lift prices for U.S.-produced steel but only by a modest amount because U.S. mills are likely to increase production fairly quickly once their margins improve.
Analysts remain somewhat bullish on the stock, with half of the 12 with a Buy or Strong Buy rating and five more assigning a Hold rating. At a share price of around $67.70, the upside potential based on a median price target of $92.00 is 35.9%. At the high price target of $110.00, the upside potential is 62.5%.
The consensus second-quarter revenue estimate is $5.94 billion, up 6.7% sequentially and by 32.9% year over year. Adjusted EPS are tabbed to come in at $6.25, up nearly 3.9% sequentially and nearly 84% higher year over year. For the full fiscal year, Steel Dynamics is expected to report EPS of $20.05, up 24.6%, on sales of $22.24 billion, up 20.8%.
Steel Dynamics stock trades at 3.4 times expected 2022 EPS, 7.3 times estimated 2023 earnings of $9.30 and 9.2 times estimated 2024 earnings of $7.38 per share. The stock’s 52-week range is $50.54 to $100.37, and Steel Dynamics pays an annual dividend of $1.12 (yield of 2.01%). Total shareholder return over the past year was 15.1%.
Tesla
Shares of Tesla Inc. (NASDAQ: TSLA) reached an all-time high last November. Since then, the stock price has dropped by about 41%. Even so, the shares are up about 12% over the past 12 months. By now, everyone knows that lockdowns in China caused new vehicle production to fall to 245,000 units, some 50,000 fewer than in the previous quarter. Still, Tesla has been able to raise its prices, and its margins for the quarter may come in higher than many observers expect.
Sentiment toward Tesla remains mixed. Of 38 analysts covering the stock, 22 have a Buy or a Strong Buy rating and nine more rate the shares at Hold. At a share price of around $721.60, the implied upside based on a median price target of $950.00 is 31.7%. Based on a high price target of $1,580.00, the upside potential is119%.
Analysts expect Tesla to post second-quarter revenue of $16.92 billion, down 9.8% sequentially and up 41.5% year over year, and adjusted EPS of $1.80, down 44.0% sequentially and by 24.1% year over year. For full fiscal 2022, current estimates call for EPS of $11.85, up nearly 75%, on sales of $84.86 billion, up 57.7%.
Tesla stock trades at 60.9 times estimated 2022 EPS, 45.1 times estimated 2023 earnings of $16.02 and 36.7 times estimated 2024 earnings of $19.67. The stock’s 52-week range is $620.57 to $1,243.49. Tesla does not pay a dividend. Total shareholder return over the past year is 12%.
United Airlines
Over the past 12 months, shares of United Airlines Holdings Inc. (NASDAQ: UAL) have fallen by about 14.5%. Higher fuel prices and crew shortages continue plaguing the airline, and United has responded by discontinuing or cutting flights to 25 smaller cities. A Delta order for more than 100 new Boeing 737 Max aircraft has given the big U.S. carriers a shot in the arm this week, but United investors are not expected to see a big improvement in profitability until next year.
Analysts continue to be cautious about United stock. Of 20 brokerages covering the firm, nine have Hold ratings and eight rate the shares at Buy or Strong Buy rating. At a share price of around $39.30, the upside potential based on a median price target of $57.00 is 45%. At the high price target of $86.50, the upside potential rises to 120%.
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