In early trading Friday, the Dow Jones industrials traded up 0.44%, the S&P 500 was up 0.37% and the Nasdaq traded up 0.52%. Electric vehicle maker Tesla and hard drive maker Seagate both added nearly 11% to their share prices on Thursday, pulling the indexes higher. Good economic news reversed the uninspired trading that took place in the premarket session.
After U.S. markets closed Thursday, Intel reported missed estimates on both adjusted earnings per share and revenue. Even worse, the company’s current quarter revenue guidance fell far short of the consensus estimate. Shares traded down about 8% Friday morning.
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Another Dow stock, Visa, reported beats on the top and bottom lines, thanks to international travelers who raised their payment volume by 22% year over year and the rest of us who boosted payment volume and total transactions by 10% each. Shares traded up more than 3% Friday morning.
Before markets opened on Friday, American Express reported results that missed on both EPS and revenue. Upside guidance for the new fiscal year and a 15% increase to the annual dividend had shares up by more than 10%.
Chevron also missed the consensus EPS estimate but beat the revenue estimate by about $2.5 billion. The company said it expects 2023 production to be flat to up 3%, with an average Brent crude price of $80 a barrel. Rising natural gas prices will increase costs at Chevron’s refineries, however, and performance at the company’s other segments is uncertain, tending toward lower. Shares traded down about 2.4% shortly after the opening bell.
Alliance Resource Partners, GE Healthcare, Li-Cycle and SoFi Technologies are set to report quarterly results first thing Monday morning.
Here are previews of five companies set to report results before Tuesday’s opening bell. Three of them are Dow Jones industrial average components.
Caterpillar
Shares of heavy equipment maker Caterpillar Inc. (NYSE: CAT) posted a new 52-week high on Thursday. The share price is up nearly 45% over the past six months, including a gain of more than 9% in January. Coming federal spending on infrastructure has been a major influence in the stock’s rising share price, as have price increases.
Caterpillar’s six-year agreement with the United Auto Workers expires March 1, and around 7,000 workers will vote on a strike authorization on Friday. Last week, a nine-month strike against another farm equipment maker, CNH, ended. A strike against Deere lasted five weeks in 2021 before ending in a six-year agreement.
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Of 29 brokerages covering the shares, 14 have a Hold rating and 13 have Buy or Strong Buy ratings. At a recent share price of around $262.00, the stock has outrun its median price target of $250.00. At the high target of $337.00, the upside potential is 28.6%.
Caterpillar is expected to report fourth-quarter revenue of $15.84 billion, which would be up 5.6% sequentially and 14.8% higher year over year. Adjusted EPS are forecast at $4.03, up 1.9% sequentially and by nearly 50% year over year. For the full 2022 fiscal year, analysts are expecting EPS of $13.92, up 28.8%, on revenue of $58.55 billion, up 14.9%.
Caterpillar stock trades at about 18.8 times expected 2022 EPS, 17.2 times estimated 2023 earnings of $15.24 and 15.7 times estimated 2024 earnings of $16.70. The stock’s 52-week range is $160.60 to $262.26. Caterpillar pays an annual dividend of $4.80 (yield of 1.8%). Total shareholder return for the past 12 months was 25.2%.
Exxon Mobil
Shares of Exxon Mobil Corp. (NYSE: XOM) have risen by almost 60% over the past 12 months. The world’s five supermajor oil companies (Exxon, Chevron, BP, Shell and TotalEnergies) raked in an estimated total of $190 billion in profits last year. A large share of that profit is headed for investors through dividend hikes and share buybacks. Friday morning, Chevron announced a dividend increase and a new $75 billion buyback plan that represents more than 20% of the oil giant’s market cap. Will Exxon match that? Will the Biden administration do anything but scold oil companies for making outrageous profits at consumers’ expense? Stay tuned.
Of 29 analysts covering the stock, 12 rate the shares at Hold, nine have Strong Buy ratings and seven rate the shares at Buy. At a price of around $118.00 a share, the upside potential based on a median price target of $110.00 is 3.4%. At the high target of $140.00, the upside potential is 18.6%.
Fourth-quarter revenue is forecast at $60.21 billion, down 11.0% sequentially but up 6.2% year over year. Adjusted EPS are pegged at $3.29, down 26.1% sequentially but 60.5% higher year over year. For the full 2022 fiscal year, estimates call for EPS of $13.89, up 158.2%, on sales of $411.36 billion, up 44%.
Exxon shares trade at 8.5 times expected 2022 EPS, 10.8 times estimated 2023 earnings of $10.88 and 12.0 times estimated 2024 earnings of $9.82 per share. The stock’s 52-week range is $73.65 to $117.78, and the high was posted Thursday. Exxon pays an annual dividend of $3.64 (yield of 3.09%). Total shareholder return for the past 12 months was 62.1%.
McDonald’s
Shares of McDonald’s Corp. (NYSE: MCD) have added nearly 10% to their price over the past 12 months, though growth for the first month of 2023 so far is just 4.3%. McDonald’s and other fast-food chains have been fighting a 2024 California law that could raise hourly wages at company and franchisee stores to $22 an hour. The law known as AB257, or the FAST Act, was signed on Labor Day and was set to be enforced beginning January 1. A last-minute lawsuit was filed on December 29 that sought and received a hold on enforcement until an effort to get a referendum on the 2024 ballot is completed.
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In Delaware Chancery Court this week, a decision allowing shareholders to sue a former McDonald’s executive was approved. The case sets a precedent that makes company officers, not just directors, responsible for oversight of corporate activities. The lawsuit centers on former chief people officer David Fairhurst, who breached his oversight responsibilities by allegedly acting in bad faith. Fairhurst and former CEO Steven Easterbrook were both fired in 2019 following allegations of sexual misconduct. Easterbrook repaid McDonald’s $105 million to settle the allegations and was dismissed from the lawsuit.
None of the legal overhangs is having much effect on analysts, who are solidly bullish on the stock. Of 38 brokerages covering the company, 27 have a Buy or Strong Buy rating, while another 10 rate the shares at Hold. At a price of around $275.00 a share, the upside potential based on a median price target of $296.00 is 7.6%. At the high price target of $328.00, the upside potential is about 19.3%.
Fourth-quarter revenue is forecast at $5.73 billion, down 2.4% sequentially and by 4.7% year over year. Adjusted EPS are pegged at $2.45, down 8.4% sequentially and 9.9% lower year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $9.96, up 7.3%, on revenue of $23.02 billion, down about 0.9%.
McDonald’s stock trades at 27.6 times expected 2022 EPS, 25.9 times estimated 2023 earnings of $10.60 and 23.8 times estimated 2024 earnings of $11.55 per share. The stock’s 52-week range is $217.68 to $281.67. McDonald’s pays an annual dividend of $6.08 (yield of 2.21%). Total shareholder return over the past 12 months is 12.42%.
24/7 Wall St.Pfizer
Drugmaker Pfizer Inc. (NYSE: PFE) has posted a share price dip of nearly 17% over the past 12 months and reached an all-time high in mid-December of 2021. Since that high was put up, the shares have dropped almost 25%.
Pfizer’s bivalent coronavirus booster has been found to increase the risk of ischemic strokes among people over 65, but, a new CDC report found, the risk is small and may be associated with receiving a flu shot at the same time as the booster. The company said last month that it is shutting down most of its efforts to find therapies for early-stage rare diseases in neurology and cardiopathy and programs in gene therapy. The company did not indicate the size of any cost savings.
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Of 24 analysts, 14 rate the stock at Hold and 10 have a Buy or Strong Buy rating. At a share price of around $44.00, the upside potential based on a median price target of $52.65 is nearly 20%. At the high target of $75, the upside potential is 70.5%.
Fourth-quarter revenue is forecast at $24.6 billion, up 8.7% sequentially and by 3.2% year over year. Adjusted EPS are pegged at $1.07, down 40.1% sequentially and down a penny year over year. For the full 2022 fiscal year, analysts expect Pfizer to report EPS of $6.49, up 46.9%, on sales of $100.5 billion, up 23.6%.
Pfizer stock trades at 6.8 times expected 2022 EPS, 9.9 times estimated 2023 earnings of $4.44 and 10.8 times estimated 2024 earnings of $7.08 per share. The stock’s 52-week range is $41.45 to $56.32. Pfizer pays an annual dividend of $1.64 (yield of 3.71%). Total shareholder return for the past 12 months was negative at 14.37%.
UPS
United Parcel Service Inc. (NYSE: UPS) stock has added about 4.6% over the past 12 months, including a plunge of more than 9% in the past three months. While worries about macroeconomic issues, particularly growth, dog the company, UPS’s two-year focus on small and medium-sized business deliveries, health care, international shipping and business-to-business e-commerce has been paying off. Earnings growth may be tapering, but UPS’s customer base is solid and unlikely to run off to a competitor.
Analysts remain somewhat bullish on the stock, with 15 of 30 having a Buy or Strong Buy rating and 12 others rating it at Hold. At a share price of around $182.00, the upside potential based on a median price target of $191.50 is 5.2%. At the high price target of $227.00, the upside potential is 24.7%.
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