In the first half-hour of trading Tuesday, the Dow Jones industrials were 0.26% lower, the S&P 500 down 0.15% and the Nasdaq down 0.09%. The monthly consumer price index (CPI) came in as expected with an increase of 0.5% month over month, and core CPI also met an expected increase of 0.4%. Overall inflation dropped to 6.4% on a 12-month basis, an improvement over December’s 12-month inflation rate of 6.5%. The data was clearly interpreted to mean more Federal Reserve tightening, and shares that had been traded higher in the premarket sank as the opening bell approached.
After U.S. markets closed Monday, Palantir Technologies reported beating fourth-quarter estimates on both earnings per share (EPS) and revenue. The $0.04 per-share profit was the company’s first since coming public in September 2020. Guidance for the first quarter and the full 2023 fiscal year was a bit light, but shares traded up 10.5% shortly after Tuesday’s opening bell.
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Vornado Realty Trust reported better-than-expected profits but missed on revenue. Shares traded down 0.2% early Tuesday.
Before markets opened on Tuesday morning, Dow component Coca-Cola met analysts’ EPS estimate and beat the revenue estimate. Warren Buffett’s favorite drink also issued upside guidance. Shares traded up a fraction in the morning.
Peabody Energy hammered the consensus EPS estimate and easily beat the revenue forecast. Shares traded up 4.2%.
Cleveland-Cliffs reported results that were more or less in line with expectations, but far below the iron ore miner and steelmaker’s fourth quarter of last year. Shares traded down about 1.5%.
After markets close on Tuesday, Airbnb, Devon Energy and Livent will report quarterly earnings. Barrick Gold, Kraft Heinz and Roblox are scheduled to post their quarterly results before Wednesday’s opening bell.
Here is a look at what to expect from these four firms expected to share their results later on Wednesday.
24/7 Wall St.Albemarle
Lithium producer Albemarle Corp. (NYSE: ALB) has added about 17% to its share price in the past 12 months, thanks to a year-to-date bump of 24.5%. The company posted a new 52-week high in mid-November, and shares rose by more than 30% by the end of the year. Battery-grade lithium carbonate has dropped in price by around 21% since reaching a mid-November high of $87,600. The current price is around $69,600 per metric ton. At its investor day last month, Albemarle gave upbeat guidance for the 2023 fiscal year and outlined a path to an 80% jump in sales by 2027.
Analysts are mostly bullish on Albemarle. Of 26 brokerages covering the stock, 14 have a Buy or Strong Buy rating and 10 have Hold ratings. At a recent price of around $270.00 a share, the implied gain based on a median price target of $315.00 is 16.7%. Based on the high price target of $497.00, the upside potential is 84.1%.
Albemarle’s fourth-quarter revenue is forecast at $2.6 billion, which would be up 24.3% sequentially and by about 191% year over year. Adjusted EPS are forecast at $8.37, up 11.6% sequentially and more than 700% higher year over year. For the full 2022 fiscal year, analysts expect Albemarle to report EPS of $21.75, up almost 440%, on sales of $7.3 billion, up 120%.
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Albemarle stock trades at about 12.4 times expected 2022 EPS, 9.3 times estimated 2023 earnings of $29.00 and 9.5 times estimated 2024 earnings of $28.51 per share. The stock’s 52-week trading range is $169.93 to $334.55. Albemarle pays an annual dividend of $1.58 (yield of 0.59%). Total shareholder return over the past year was 17.67%.
Antero Resources
Independent oil and gas producer Antero Resources Corp. (NYSE: AR) is a major producer of natural gas liquids and natural gas in the Appalachian Basin. Over the past 12 months, the company’s share price has increased by nearly 39%. Between January and early June of last year, the stock soared by 170%. From then until early July, the stock plunged by 40%. Natural gas prices have fallen from $8.80 per million BTUs in August to around $2.54 Tuesday morning. The EU gas market correction mechanism comes into force Tuesday, and that will not help.
Analysts are bullish on Antero stock. Of 17 brokerages surveyed, 10 have a Buy or Strong Buy rating and six more rate the shares at Hold. At a price of around $28.00 a share, the upside potential based on a median price target of $39.50 is 41.1%. At the high price target of $51.00, the upside potential is 82.1%.
Fourth-quarter revenue is forecast at $1.53 billion, down 26.1% sequentially and 36.0% lower year over year. Analysts expect Antero to post EPS of $0.96, down 45.1% sequentially but up 93.5% year over year. For the full fiscal 2022 year, EPS are forecast at $5.66, up 292.5% year over year, on sales of $6.58 billion, up 42.5%.
Antero stock trades at 5.0 times expected 2022 earnings, 5.9 times estimated 2023 earnings of $4.76 per share and 6.0 times estimated 2024 earnings of $4.66 per share. The stock’s 52-week range is $19.38 to $48.80. The company does not pay a dividend, and total shareholder return for the past year was 39%.
24/7 Wall St.Cisco Systems
Networking giant and Dow component Cisco Systems Inc. (NASDAQ: CSCO) has posted a share price decline of 11.2% over the past 12 months. Since sinking to a new 52-week low in mid-October, the stock is up about 18.8%, but most of that gain had come by mid-November. Since then, shares have bounced around in a range of about $2.00 up or down. The company announced a layoff of about 4,100 workers in November, and the CEO recently said there would be no more anytime soon.
Analysts remain mildly bullish on Cisco, with 12 of 27 having a Buy or Strong Buy rating and 14 more having Hold ratings. At a share price of around $48.00, the upside potential based on a median price target of $52.00 is 8.3%. At the high price target of $67.00, the upside potential is 39.6%.
For Cisco’s second quarter of fiscal 2023, analysts expect revenue of $13.41 billion, a decrease of 1.6% sequentially but up 5.4% year over year. Adjusted EPS are forecast at $0.86, down 0.6% sequentially and up two cents year over year. For the full fiscal year ending in July, analysts anticipate EPS of $3.55, up 5.6%, on revenue of $54.5 billion, up about 5.7%.
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Cisco’s stock trades at a multiple of 13.5 times expected 2023 EPS, 12.5 times estimated 2024 earnings of $3.84 and 11.9 times estimated 2025 earnings of $4.03 per share. The stock’s 52-week range is $38.60 to $57.69. Cisco pays an annual dividend of $1.52 (yield of 3.22%). Total shareholder return over the past year was negative 8.23%.
Energy Transfer
Natural gas pipeline and infrastructure company Energy Transfer LP (NYSE: ET) has added nearly 26% to its share price over the past 12 months. For the year to date, the common units are up 9.1%.
Like many pipeline operators, Energy Transfer is a master limited partnership (MLP) that pays a generous distribution to unitholders and is mostly shielded from commodity price movements because the bulk of the company’s capacity is contracted. The company raised its quarterly dividend by 15% last month, pushing its dividend yield above 9%, and returned the payment to its pre-pandemic level.
Free cash flow in the prior quarter came to $2.28 billion, while dividend payments totaled $774 million. The company issued $7.6 billion in new debt in the third quarter and repaid almost $8.3 billion. Over the past 12 months, the company has repaid $30.6 billion in debt, issued $28.8 billion in new debt, posted free cash flow of $6.18 billion, and paid almost $2.1 billion in interest.
Analysts are solidly bullish on Energy Transfer, with all 18 brokerages covering the stock having a rating of Buy or Strong Buy. At a share price of around $13.00, the upside potential based on a median price target of $16.50 is 26.9%. At the high price target of $21.00, the upside potential is 38.1%.
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