Earnings Previews: Home Depot, Teck Resources, Walmart

In the first hour of trading on Friday, the Dow Jones industrials were down 0.18%, the S&P 500 down 0.75% and the Nasdaq down 1.33%.

After U.S. markets closed on Thursday, Applied Materials handily beat top-line and bottom-line estimates. Guidance was a mixed bag, however, with customer spending in 2023 likely to be down again while the longer-term outlook is “highly positive.” Shares traded down about 1.2%

DraftKings also beat consensus estimates for profits and revenue. The sports betting firm issued guidance in line with analysts’ consensus estimates. Shares traded 14.3% higher Friday morning.

Vale reported earnings per share (EPS) and revenue above consensus estimates for the quarter, but net income was down 15.8% sequentially and 20.8% year over year. The stock traded was basically unchanged Friday morning.

Before markets opened on Friday, Deere reported solid beats on both EPS and revenue and raised its fiscal 2023 revenue guidance. Shares traded up 6.1% in early trading.

U.S. markets will be closed on Monday for the President’s Day holiday. On Tuesday, two Dow components and a major Canada-based mining company are set to report results before markets open.

Home Depot

Home Depot Inc. (NYSE: HD) has dropped more than 8% from its share price over the past 12 months. Since posting its 52-week high one year ago, the stock has declined by 5.4%. Over the past three months, shares are up 2%. The January quarter is typically the company’s annual low point, so the outlook for the April and July quarters will carry more weight than the results.

Of 35 analysts covering the stock, 21 have a Buy or Strong Buy rating and 13 rate it at Hold. At a recent share price of around $321.00, the upside potential based on a median price target of $343.00 is about 6.9%. At the high price target of $470.00, the upside potential is 46.4%.

Analysts expect Home Depot to report fourth-quarter revenue of $36 billion, which would be down 7.4% sequentially but up about 0.8% year over year. Adjusted EPS are forecast at $3.29, down 22.4% sequentially but 2.5% higher year over year. For the full 2023 fiscal year ending in January, EPS are forecast at $16.67, up 7.3%, on sales of $157.49 billion, up about 4.2% year over year.

Home Depot stock trades at about 19.3 times expected 2023 EPS, 19.1 times estimated 2024 earnings of $16.80 and 18.1 times estimated 2025 earnings of $17.75 per share. The stock’s 52-week trading range is $264.51 to $352.31. The Dow component pays an annual dividend of $7.60 (yield of 2.37%). Total shareholder return for the past year is negative 5.93%.

Teck Resources

Canada-based Teck Resources Ltd. (NYSE: TECK) mines metallurgical coal used for production of steel, copper, zinc and energy (primarily oil). Shares are up more than 21% for the past year, including a jump of 16% so far in 2023.

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