Investing

Earnings Previews: AT&T, Boeing, Coca-Cola

Paul Ausick

Published: July 24, 2023 11:56 am

No notable earnings reports were released late Friday or early Monday.

After U.S. markets close on Monday, Cadence Systems, Cleveland-Cliffs and NXP Semiconductor will release their quarterly earnings reports.

General Motors, NextEra Energy and Verizon are on deck to release their latest results first thing Tuesday morning, and look for reports from Alphabet, Microsoft and Visa later in the day.

Here is a look at three companies set to report quarterly results Wednesday morning.

AT&T

Shares of AT&T Inc. (NYSE: T) have dropped by more than 21% over the past 12 months, with the biggest share of that decline coming in 2023. The stock posted a new 52-week low last week.

Recent reports that Verizon and AT&T may be liable for potentially massive damages for leaving unused lead-wrapped transmission lines buried all over the country have sent litigation risks soaring and share prices plunging. And litigation risk translates into dividend risk. Because that is AT&T’s big attraction for shareholders, any threat to the generous dividend is relevant.

Sentiment on the stock remains cautious. Of 28 brokerages covering AT&T, 11 have a Buy or Strong Buy rating, while 15 have Hold ratings. At a recent price of around $15.00 a share, the implied upside based on a median price target of $20 is 33%. At the high price target of $28, the upside potential is about 86.7%.

Second-quarter revenue is forecast at $39.95 billion, which would be down 0.6% sequentially but up 1.0% year over year. Adjusted earnings per share (EPS) are forecast at $0.60, up 0.4% sequentially and 7.7% lower year over year. For the full 2023 fiscal year, EPS are expected to come in at $2.43, down 5.5%, on sales of $122.05 billion, up about 1.1%.

AT&T stock trades at 6.1 times 2023 EPS, 6.0 times estimated 2024 earnings of $2.48 and 6.0 times estimated 2025 earnings of $2.50. Its 52-week trading range is $13.43 to $22.84. AT&T’s current annual dividend is $1.11 (yield of 7.57%). Total shareholder return for the past 12 months was negative 15.96%.

Boeing

Before the 737 Max crashes in 2018 and 2019, Boeing Co. (NYSE: BA) was flying high. Shares reached an all-time high of around $425. The company’s stock was absolutely hammered by the COVID-19 pandemic that hit in February 2020 and sent the stock to below $100 by late March. Getting back has been hampered by supply chain issues and more problems with the 777 and the 737.

With air travel currently in high demand from consumers, Boeing is ramping up production of its best-selling 737 with a plan to reach 45 per month by January. The Wall Street consensus calls for Boeing to post a GAAP profit for the 2023 fiscal year after combined losses of more than $15 in the past two years. Boeing’s outlook could carry a lot of weight.

Of 25 analysts covering Boeing stock, 16 have a Buy or Strong Buy rating and eight more have Hold ratings. At a share price of around $214.00, the implied upside based on a median price target of $233.50 is 9.1%. At the high target of $300.00, the implied upside is about 40.2%.

The consensus estimate for second-quarter revenue is $18.53 billion, up 3.4% sequentially and by 11.1% year over year. Analysts are forecasting adjusted an adjusted loss per share of $0.89, compared to a loss of $1.27 per share in the prior quarter and a loss per share of $0.37 in the first quarter of last year.

For the full 2023 fiscal year, Boeing is expected to post an adjusted loss of $1.43 per share, compared to last year’s loss per share of $11.06. Revenue is expected to increase by 17.3% to $78.13 billion. On a GAAP basis, EPS are forecast to come in at $0.83 for the year, including a fourth-quarter total of $1.21 per share.

Boeing stock trades at 41.4 times estimated 2024 earnings of $5.18 and 23.9 times estimated 2025 earnings of $8.99 per share. The 52-week range is $120.99 to $223.91. Boeing has suspended its dividend, and total shareholder return for the past year was 35.69%.

Coca-Cola

Dow Jones industrial average component and Warren Buffett favorite Coca-Cola Co. (NYSE: KO) has posted a share price increase of about 1.8% over the past 12 months. For the year to date, the stock is down by about the same amount. Beverage industry stocks are up by about 7.4% over the past year and up by about 3.5% for the year to date.

Investors like Buffett never forget the company’s solid dividend. Even though free cash flow was slightly negative in the first quarter, that is not something Wall Street expects to see reported for the June quarter.

Analysts are bullish on the stock, with 19 of 25 brokerages having a Buy or Strong Buy rating. Another five have a Hold rating. At a share price of around $62.50, the upside potential based on a median price target of $69.50 is 11.2%. At the high price target of $75.00, the upside potential is 20%.

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Second-quarter revenue is forecast at $11.75 billion, up 7.2% sequentially and 4.0% higher year over year. Adjusted EPS are pegged at $0.72, up 6.1% sequentially and by 2.9%year over year. For the full 2023 fiscal year, consensus estimates call for EPS of $2.61, up 5.2%, on revenue of $44.95 billion, up 4.4%.

Coca-Cola stock trades at 23.9 times expected 2023 EPS, 22.2 times estimated 2024 earnings of $2.81 and 20.7 times estimated 2025 earnings of $3.02 per share. The 52-week range is $54.02 to $65.47. Coca-Cola pays an annual dividend of $1.84 (yield of 2.95%). Total shareholder return for the past year was 4.45%.