Investing

Earnings Previews: Occidental Petroleum, Range Resources, Zoom Video

Paul Ausick

Published: February 24, 2023 10:01 am

In the first half-hour of Friday’s regular trading session, the Dow Jones industrials traded down 1.18%, the S&P 500 down 1.32% and the Nasdaq down 1.63%. Blame the personal consumption expenditures (PCE) report. Prices and spending rose more than expected, raising the odds for more Federal Reserve tightening.

After U.S. markets closed Thursday, Block reported mixed results, missing the earnings per share (EPS) estimate but beating revenue expectations. The company said it would be slowing the pace of expense growth significantly this year. Shares traded up 3.2% shortly after the opening bell.

[in-text-ad]

Carvana missed consensus EPS and revenue estimates. The company had no upbeat comments on the current quarter either. Shares traded down 12.4%.

Warner Bros. Discovery also missed estimates on the top and bottom lines. The company reduced its debt by $7 billion — only $43 billion left to go. Maybe more big-budget movies based on Tolkien’s hobbits and wizards will work some magic for the company. Investors are skeptical. Shares traded up by around 2% early in the morning.

There were no notable reports released before markets opened Friday. Fisker and Li Auto will report quarterly results first thing Monday morning.

Here is a look at three companies set to report results after U.S. markets close on Monday.

Occidental Petroleum

Of the oil and gas stocks we cover, shares of Occidental Petroleum Corp. (NYSE: OXY) have posted the largest share price gain (53.1%) over the past 12 months. When the company reported September quarter results, the share price had improved by more than 120% in the previous 12 months.

Barron’s has a good story about how Oxy may begin redeeming the $10 billion in preferred shares Berkshire Hathaway purchased to help Oxy beat Chevron to punch in acquiring Anadarko. Oxy could begin redeeming the shares (at 110% of face value) in the current quarter if certain conditions are met. Investors will probably hear more about this on Monday.

Of 27 brokerages covering the stock, 15 rate it at Hold and 10 have a Buy or Strong Buy rating. At a recent share price of around $59.00, the implied gain based on a median price target of $72.00 is 22%. At the high price target of $100.00, the upside potential is 69.5%.

24/7 Wall St.
7 ‘Strong Buy’ 2023 Dividend Aristocrats to Buy Now and Hold Forever in Your IRA

Fourth-quarter revenue is forecast at $8.21 billion, which would be down 13.6% sequentially but up 25.0% year over year. Adjusted EPS are pegged at $1.83, down 25.1% sequentially and 23.6% higher year over year. For the full 2022 fiscal year, analysts expect to see EPS of $9.80, up more than 280%, on revenue of $36.5 billion, up 38.7%.

Occidental stock trades at about 8.5 times expected 2022 EPS, 10.8 times estimated 2023 earnings of $5.49 and 18.7 times estimated 2024 earnings of $3.17 per share. The stock’s 52-week trading range is $37.55 to $77.13. Occidental pays an annual dividend of $0.52 (yield of 0.89%). Total shareholder return for the past year was 54.34%.

Range Resources

Independent oil and gas producer Range Resources Corp. (NYSE: RRC) has posted a 12-month share price increase of 11.5%. Three months ago, the stock had risen by more than 50%.

[in-text-ad]

As with its much larger rival Occidental, lower natural gas, natural gas liquids (NGLs) and crude prices put a serious dent in revenue. Range produced about 1.52 billion cubic feet of natural gas per day in the fourth quarter, nearly 108,000 barrels of NGLs per day, and 6,700 barrels a day of oil. Earlier this month, the company reported that its proved reserves rose by 2% in 2022 to 1.7 trillion cubic feet equivalent.

As a group, analysts are cautious. Of 26 brokerages covering the stock, 14 have Hold ratings and nine have a Buy or Strong Buy rating. At a share price of around $25.00, the stock’s upside potential based on a median price target of $31.50 is 26%. At the high price target of $48.00, the upside potential is 92%.

For the fourth quarter, Range Resources is expected to report revenue of $655.43 million, down 14.0% sequentially and by 64.7% year over year. Adjusted EPS are forecast at $1.22, down 11.2% sequentially and 27.1% lower year over year. For the full 2022 fiscal year, analysts are looking for EPS of $4.99, up almost 147%, and revenue of $3.53 billion, up 20.5%.

Range Resources stock trades at 5.1 times expected 2022 EPS, 7.5 times estimated 2023 earnings of $3.36 and 6.1 times estimated 2024 earnings of $4.15 per share. The stock’s 52-week range is $22.06 to $37.44, and the company pays a dividend of $0.32 (yield of 1.3%). Total shareholder return for the past 12 months was 12.14%.

Zoom Video

Over the past 12 months, shares of Zoom Video Communications Inc. (NASDAQ: ZM) have dropped by about 37.9%. That includes a share price boost of 10.1% since the beginning of the year.

The company recently announced a cut of 15% (about 1,300) to its workforce. CEO Eric Yuan cut his salary for this year by 98% and will not collect his fiscal 2023 bonus payments. Maybe this will help Zoom get some of its mojo back: Mercedes-Benz announced Thursday that Zoom video conferencing will be available in the company’s 2024 E-class cars. If this were a good idea, Elon Musk would already have thought of it. Oh, wait …

Analysts remain unconvinced. Of 34 brokerages covering the stock, 24 have a Hold rating and nine have Buy or Strong Buy ratings. At a share price of around $75.00, the upside potential based on a median price target of $85.00 is 13.3%. At the high price target of $105.00, the upside potential is 70%.

24/7 Wall St.
Top Analysts Pound the Table Now on 5 ‘Strong Buy’ Stocks Yielding 7% or More

Fiscal fourth-quarter revenue is forecast at $1.1 billion, down 0.1% sequentially but up 2.8% year over year. Adjusted EPS are pegged at $0.82, down 23.7% sequentially and by 36.4% year over year. For the full 2023 fiscal year that ended in January, current estimates call for EPS of $3.95, down 22.2%, on sales of $4.38 billion, up 6.9%.

Zoom Video’s stock trades at 18.9 times expected 2023 EPS, 20.3 times estimated 2024 earnings of $3.67 and 19.2 times estimated 2025 earnings of $3.88 per share. The stock’s 52-week range is $63.55 to $136.00. Zoom does not pay a dividend, and total shareholder return for the past year is negative 37.9%.