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Earnings Previews: General Electric, GE Healthcare, General Motors, Raytheon, UPS
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In late-morning trading on Friday, the Dow Jones industrials were down 0.1%, the S&P 500 down 0.09% and the Nasdaq 0.07% lower.
After U.S. markets closed Thursday afternoon, railroad operator CSX reported quarterly results that beat estimates on both the top and bottom lines. Shares traded up 3.4% Friday morning.
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Before markets opened on Friday, Procter & Gamble beat the consensus earnings per share (EPS) and revenue estimates. The consumer goods giant also affirmed previous fiscal 2023 EPS guidance and raised revenue guidance. Shares traded up by 3.7%.
Regions Financial missed both Wall Street revenue and profit estimates, but considering the bank’s near-death experience, that is not so bad. The stock traded down about 3.2% Friday morning.
Schlumberger also beat both top-line and bottom-line estimates, but not by enough to impress investors. Shares traded down 4.9% Friday morning.
Freeport-McMoRan beat consensus estimates for both EPS and revenue, but the bar was set too low to give shares a lift. Lower copper prices and a 50% drop in production contributed to the mediocre results. Shares traded down by about 4.6% Friday morning.
Cleveland-Cliffs, Coca-Cola, First Republic Bank and Range Resources are on deck to report quarterly results on Monday. The following morning, look for reports from McDonald’s, PepsiCo, 3M and Verizon.
Here are previews of four more companies reporting results early Tuesday.
24/7 Wall St.General Electric
Over the past 12 months, shares of General Electric Co. (NYSE: GE) have added more than 9%. On Thursday, the stock broke through the $100 per share barrier for the first time in five years. The stock price has nearly doubled in the past six months and has risen more than 50% so far in 2023. The successful spin-off of its health care business will be followed early next year by the spin-off of its energy business, leaving the booming aerospace division as the new GE.
Analysts remain bullish on the stock. There are 16 Buy or Strong Buy ratings, along with four Hold ratings, among the 20 brokerages covering the stock. At a recent price of around $100.00 a share, the potential upside to a median price target of $104.00 is 4%. At the high target of $120.00, the upside potential is 20%.
First-quarter revenue is forecast at $13.46 billion, which would be down 38.2% sequentially and 21.0% lower year over year. Adjusted EPS are forecast at $0.14, down 89% sequentially and by 41.7% year over year. For the full 2023 fiscal year, analysts expect GE to report EPS of $1.98, down 24.3%, on sales of $62.81 billion, down 18%. First-quarter numbers for the prior quarter and the prior year include health care operations that were spun off in January.
GE stock trades at 50.4 times expected 2023 EPS, 25.1 times estimated 2024 earnings of $3.97 and 19.2 times estimated 2025 earnings of $5.20 per share. The stock’s 52-week trading range is $59.93 to $100.47, and GE pays an annual dividend of $0.32 (yield of 0.32%). Total shareholder return for the past 12 months was 40.7%.
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GE Healthcare
GE Healthcare Technologies Inc. (NASDAQ: GEHC) began trading on January 3 and joined the S&P 500 index on the same day. Since the spin-off from GE, which retained a 20% stake in the company, shares have added nearly 47%. The health care technology company received FDA approval for its patient monitoring system. Institutional ownership of the stock is around 53%, indicating that the so-called smart money is paying more attention to its growth possibilities.
The number of analysts covering the stock has risen from two in January to seven, and five of those brokerages rate the stock a Buy or Strong Buy. There is also one Sell rating. At a share price of around $85.50, the implied upside based on a median price target of $91.00 is 6.4%. At the high target of $95.00, the upside potential is 11.1%.
Analysts anticipate first-quarter revenue of $4.63 billion, down 6.2% sequentially. EPS are expected to come in at $0.79. For the full 2023 fiscal year, EPS are forecast at $3.72, down 19.6% from a pro forma result of $4.63 in 2022.
GE Healthcare stock trades at 22.9 times expected 2023 EPS, 20.1 times estimated 2024 earnings of $4.23 and 17.3 times estimated 2025 earnings of $4.92 per share. The stock’s 52-week range is $59.93 to $100.47, and GE pays an annual dividend of $0.32 (yield of 0.32%). Total shareholder return for the past 12 months was 40.7%.
The stock’s post-IPO range is $53.00 to $86.88. GE Healthcare does not pay a dividend.
24/7 Wall St.General Motors
General Motors Co. (NYSE: GM) has seen its share price drop by about 20% over the past year, including a dip of 1.2% so far in 2023. That’s better than Ford’s decline of nearly 27%, but far short of Stellantis’s boost of 21.1%.
Earlier this week, the company agreed to pay a fine of $365,000 to settle a discrimination claim filed by the U.S. Department of Justice. In the first quarter, GM sold just over 20,000 EVs in the United States, about double the number rival Ford sold, while Stellantis failed to sell any. The only good news there is that GM’s total was second only to Tesla’s first-quarter total of around 161,000 U.S. sales, even including sales by foreign carmakers, according to Cox Automotive.
Analysts like the company’s prospects. Of 26 brokers covering the stock, 14 have a Buy or Strong Buy rating and another 11 rate it at Hold. At a share price of around $33.20, the upside potential based on a median price target of $45.00 is 26.2%. At the high price target of $86.00, the upside potential is about 159%.
First-quarter revenue is forecast at $39.37 billion, down 8.7% sequentially but up 9.4% year over year. Adjusted EPS are forecast at $1.71, down 19.5% sequentially and by 18.2% year over year. For the full 2023 fiscal year, consensus estimates call for EPS of $6.12, down 19.4%, on revenue of $161.7 billion, up 3.2%.
GM stock trades at 5.4 times expected 2023 EPS, 5.3 times estimated 2024 earnings of $6.27 and 4.9 times estimated 2025 earnings of $6.84 per share. The stock’s 52-week range is $30.33 to $43.63. GM does not pay a dividend, and total shareholder return for the past year was negative 17.75%.
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Raytheon
Defense contractor Raytheon Technologies Corp. (NYSE: RTX) has seen its share price slip by 2.5% over the past 12 months. Since the beginning of 2023, the stock is down 1.4%. Earlier this week, China revealed that it has banned executives of the company’s missiles and defense segment from visiting, working, or residing in the country since mid-February. Lockheed officials were also banned. According to a report, China imposed the restrictions because the two firms make arms sales to Taiwan.
Of 23 analysts covering the stock, 13 have a Buy or Strong Buy rating, and the other 10 rate it at Hold. At a share price of around $102.30, the upside potential based on a median price target of $109.00 is 6.5%. At the high price target of $120.00, the upside potential is 17.3%.
Analysts expect Raytheon to report first-quarter revenue of $16.98 billion, down 6.2% sequentially but 8.0% higher year over year. Adjusted EPS are expected to reach $1.13, down 10.7% sequentially and by 1.7% year over year. For the full 2023 fiscal year, EPS are pegged at $5.02, up 5%, on revenue of $72.42 billion, up 8%.
Raytheon stock trades at 20.4 times expected 2023 EPS, 17.7 times estimated 2024 earnings of $5.79 and 15.2 times estimated 2025 earnings of $6.74 per share. The stock’s 52-week range is $80.27 to $108.84. Raytheon pays an annual dividend of $2.20 (yield of 2.11%). Total shareholder return over the past 12 months was 2.93%.
UPS
United Parcel Service Inc. (NYSE: UPS) stock has added about 2.7% over the past 12 months, including a jump of more than 12% so far in 2023. When rival FedEx reported results last month, the company beat the EPS estimate by 25% even though it missed the revenue estimate. The bar has been set pretty low for UPS, indicating that the delivery giant probably will have to hammer estimates in order to get a nod from investors.
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 price of around $195.60 a share, the stock trades near its median price target of $196.00. At the high price target of $225.00, the upside potential is 15%.
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