Earnings Previews: Johnson & Johnson, 3M, Verizon

In late morning trading Friday, the Dow Jones industrial average traded up 0.27%, the S&P 500 up 0.71% and the Nasdaq up 1.16%.

After U.S. markets closed Thursday, Netflix reported results that missed the profit estimate while narrowly beating on revenue. The big news was subscriber growth, the metric by which Netflix’s results are always judged. New paid subscribers totaled 7.7 million, well above the consensus estimate for 4.6 million additions and the company’s own guidance for new subscriptions of 4.6 million. Netflix also shuffled its top managers. Reed Hastings, co-founder and co-CEO, will become executive board chair, and Chief Operating Officer Greg Peters will join Ted Sarandos as co-CEO. The stock traded up about 9.5% about an hour before noon Friday.

Before markets opened on Friday morning, Regions Financial reported beating both earnings per share (EPS) and revenue estimates, and it said the bank expects adjusted revenue growth of 8% to 10% in the new fiscal year. Shares traded up about 3.9%.

Schlumberger also reported better-than-expected EPS and revenue. The oilfield services giant also raised its quarterly dividend by 43% to $0.25, beginning with the April payment to shareholders of record on February 8. Shares traded up about 0.5% just before noon Friday.

Ericsson missed the consensus EPS estimate but beat on revenue. The company is going to propose a dividend increase of 13% from an annualized $0.23 to $0.26. Shares traded down about 4.1% Friday morning.

First thing Monday morning, Baker Hughes and Synchrony Financial are on deck to report quarterly results. Early Tuesday, look for reports from D.R. Horton, General Electric, Halliburton, Lockheed Martin and Raytheon.

Here is a look at three Dow Jones industrials also set to report quarterly results before Tuesday’s open.

Johnson & Johnson

Over the past 12 months, pharmaceuticals giant and Dow component Johnson & Johnson (NYSE: JNJ) has added about 2.2% to its share price. The company announced in October that it will spin off its consumer health products division into a new company named Kenvue. Its pharmaceutical and medical device businesses are growing much faster than the market for Band-Aids and Tylenol. Like 3M, Johnson & Johnson is among the Dividend Aristocrats, with a 60-year record of consecutive dividend increases. A share price gain is a bonus for investors.

Of 21 brokerages covering the company, eight have Buy or Strong Buy ratings and the rest rate the shares at Hold. At a recent trading price of around $168.60, the upside potential based on a median price target of $180.50 is about 7.1%. At the high target of $215.00, the upside potential is 27.5%.

Fourth-quarter revenue is forecast at $23.93 billion, 0.6% sequentially and down 3.5% year over year. Adjusted EPS are expected to come in at $2.24, which would be down 12.2% sequentially but up by 5.2% year over year. For the full 2022 fiscal year, analysts expect EPS of $10.05, up 2.5%, on sales of $95.04 billion, up 1.4%.

The shares trade at 16.8 times expected 2022 EPS, 16.3 times estimated 2023 earnings of $10.37 and 15.7 times estimated 2024 earnings of $10.77 per share. The stock’s 52-week trading range is $155.72 to $186.69. The company pays an annual dividend of $4.52 (yield of 2.66%). Total shareholder return for the past year was 4.8%.

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