The three major U.S. equity indexes closed higher on Monday. The Dow Jones industrials ended the day up 1.58%, while the S&P 500 closed 1.43% higher and the Nasdaq up 1.26%. All 11 sectors closed higher, with energy (2.49%) and utilities (2.27%) adding the most. Consumer cyclicals (0.39%) and communication services (0.70%) posted the smallest gains.
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The Bureau of Labor Statistics released the November consumer price index (CPI) before markets open Tuesday morning. CPI rose by 0.1% month over month, below economists’ expectations of a 0.3% month-over-month increase. Core CPI also rose less than expected, 0.2% compared to a consensus estimate of 0.3%. The report sent stocks to a solidly higher opening on Tuesday.
The Fed’s Open Market Committee (FOMC) begins its two-day meeting Tuesday, culminating in a Wednesday announcement of an expected interest rate increase of half a percentage point, down from the three-quarter point raises of the past several months. On Thursday, the Census Bureau releases November data on retail sales. The consensus estimate calls for a decline of 0.1%, compared to an increase of 1.3% in October. Weekly reports on U.S. petroleum inventories (Wednesday) and new claims for jobless benefits (Thursday) are also among the major economic announcements for the week ahead.
The three major indexes traded higher shortly after Tuesday’s opening bell.
After U.S. markets closed Monday, Oracle reported quarterly results that beat consensus estimates on both the top and bottom lines. Guidance for the February quarter was mixed, a little light on earnings per share (EPS) but a revenue range that is higher at the low end than the consensus estimate was. Shares traded up about 4.6% Tuesday morning.
Fluence Energy posted a wider-than-expected loss per share but beat the revenue estimate by more than 22%. Revenue was 135% higher year over year, and the loss per share shrank from $0.74 to $0.32. The stock traded up about 24% early Tuesday.
Before markets open on Wednesday, Arqit Quantum, Scorpio Tankers and Weber will report quarterly results.
Here is a preview of four companies set to report results late on Wednesday or first thing Thursday morning.
24/7 Wall St.Jabil
Shares of manufacturing services provider Jabil Inc. (NYSE: JBL) have risen by about 12.5% over the past 12 months, including a spike earlier this month to an all-time high. Jabil reports quarter results before markets open on Thursday.
In early November, Jabil announced the temporary closure of six California plants for the final week to 10 days of December, resulting in 1,364 layoffs. The company did not specify if all the employees would return once the plants reopen. A week earlier, Jabil announced that Kenny Wilson would replace current chief executive and board chair Mark Mondello on May 1. Mondello will remain as executive chair. Wilson, 58, has been with the company since 2000.
Of 10 brokerages covering Jabil stock, nine have a Buy or Strong Buy rating, and the 10th rates the shares at Hold. At a recent trading price of about $72.00, the upside potential based on a median price target of $78.00 is 8.3%. At the high target of $82.00, the potential upside is about 13.9%.
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Analysts are expecting fiscal first-quarter revenue of $9.32 billion, which would be up about 3.3% sequentially and by about 8.8% year over year. Adjusted EPS for the quarter is forecast at $2.24, down 4.1% sequentially and up 16.7% year over year. For the full 2023 fiscal year ending in August, analysts currently estimate EPS of $8.27, up 8.1%, on revenue of $33.93 billion, up 1.3%.
Jabil’s shares trade at 8.7 times expected 2023 EPS, 8.2 times estimated 2024 earnings of $8.83 and 7.8 times estimated 2025 earnings of $9.24 per share. The stock’s 52-week trading range is $48.80 to $73.33. The company pays an annual dividend of $0.32 (yield of 0.45%). Total shareholder return for the past 12 months was 13.1%.
Lennar
Homebuilder Lennar Corp. (NYSE: LEN) has seen its share price decline by more than 21% over the past 12 months. The all-time high share price was posted on December 13, 2021. Look for Lennar to report results after markets close on Wednesday.
Last Friday, Bloomberg reported that Lennar is offering to sell thousands of unsold completed and some uncompleted homes to rental landlords, primarily in the U.S. Southwest and Southeast. It goes without saying that the slump in new home sales to potential homeowners is driving Lennar’s efforts.
Of 21 analysts covering the stock, 13 have a Buy or Strong Buy rating and seven more rate the stock at Hold. At a share price of around $89.00, the upside potential to a median price target of $98.50 is 10.7%. At a high target of $133.00, the upside potential is 49.4%.
For its fourth quarter of fiscal 2022, Lennar is expected to report revenue of $10.08 billion, up 12.8% sequentially and 19.6% higher year over year. Adjusted EPS are pegged at $4.90, down 5.4% sequentially but up 12.4% year over year. For the full fiscal year ended in November, EPS are forecast at $17.27, up 32.9%, on sales of $33.54 billion, up 23.6%.
Lennar stock trades at 5.0 times expected 2022 EPS, 7.9 times estimated 2023 earnings of $11.03 and 7.1 times estimated 2024 earnings of $12.26 per share. The stock’s 52-week range is $62.54 to $117.54. Lennar pays an annual dividend of $1.50 (yield of 1.69%). Total shareholder return for the past year is negative 21.3%.
Planet Labs
Planet Labs PBC (NYSE: PL) designs, builds and launches constellations of satellites that deliver high-cadence geospatial data to customers worldwide. The company completed a SPAC merger in early December of last year, and the shares have dropped by more than 40% since then. The company recently signed a deal with Accenture’s venture arm to combine Planet Labs’ satellite imagery data with Accenture’s sustainability services. Planet Labs reports results after markets close on Wednesday.
NASA’s Harvest program used the company’s imagery to report that the Ukrainian wheat harvest of 26.6 million tons was closer than expected to the five-year average of 27.9 million tons.
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Source: NASA/Planet Labs PBC
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