Investing

Wednesday Afternoon Earnings Reports From Kinder Morgan, Netflix, Tesla

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Among the most anticipated earnings reports due out this week will be released after U.S. markets close on Wednesday. We preview both in this story, along with a look at one of the country’s largest energy infrastructure companies.

Tuesday Morning’s Reports

Before U.S. markets opened on Tuesday, Albertsons reported better-than-expected adjusted earnings per share (EPS) while missing slightly on revenue. Shares traded up 0.2% in morning trading.

Bank of America reported EPS of more than 8% above the consensus estimate and revenue up 2.8% year over year. A jump in trading revenue was partially offset by a rise of 3.5% in non-interest expenses. Shares traded up 0.7%.

Goldman Sachs also topped consensus estimates on the top and bottom lines. Revenue was down by 1.3% year over year, and EPS was down nearly 34%. The stock traded down 1.7%.

Johnson & Johnson reported EPS and revenue above consensus estimates as well. Revenue was down 10.3% compared to the third quarter of last year, but EPS was up 4.3%. Shares traded down 0.9%

Lockheed Martin beat top-line and bottom-line estimates, added $6 billion to its share buyback program and boosted its quarterly dividend payment by $0.15 per share. The stock traded up 2.0%.

On Deck

After markets close Tuesday afternoon, J.B. Hunt, Omnicom and United Airlines will report results. The following morning, these companies will report quarterly results: ASML, Elevance Health, Morgan Stanley and Procter & Gamble.

Here is a look at three earnings reports on the calendar for Wednesday afternoon.

Kinder Morgan

Energy infrastructure company Kinder Morgan Inc. (NYSE: KMI) has seen its share price increase by just 0.5% over the past 12 months, including a drop of 4.4% in 2023‌.

The company has missed the consensus revenue estimate for the past three consecutive quarters. Its second-quarter revenue missed by nearly 25%. Profits, however, exceeded estimates in two of those quarters, likely due to its long-term contracts. Operating cash flow for the past 12 months totals $5.2 billion, a testament to the company’s business model despite a decline of nearly two-thirds in natural gas prices.

Of 22 brokerages covering the stock, 15 have Hold ratings and just six have Buy or Strong Buy ratings. At a recent price of around $17.00 a share, the potential upside to a median price target of $20.00 is 17.6%. At the high price target of $23.00, the implied upside is 35.3%. Those numbers have not changed since last July.

Consensus estimates call for first-quarter revenue of $4.67 billion, which would be up 33.9% sequentially but down 9.8% year over year, and EPS of $0.26, up 6.4% sequentially and up a penny year over year. For the full 2023 fiscal year, analysts forecast EPS of $1.08, down 6.5%, on sales of $17.07 billion, down 11.1%.

Kinder Morgan stock trades at 15.9 times expected 2023 EPS, 14.8 times estimated 2024 earnings of $1.17 and 14.2 times estimated 2025 earnings of $1.22. Its 52-week trading range is $15.89 to $19.36. Kinder Morgan pays an annual dividend of $1.13 (yield of 6.54%). Total shareholder return over the past 12 months was 7.06%.

Netflix

Shares of Netflix Inc. (NASDAQ: NFLX) have increased by nearly 57% in the past year. Analysts and investors were concerned that the company’s offering of an ad-supported subscription tier would weigh on revenue. That did not happen. In fact, revenue rose in each of the past two quarters and so have profits.

As always, analysts will be paying close attention to subscription growth, expecting the company’s crackdown on account sharing to produce even better results. The end of the writers’ strike may prod Netflix to raise its ad-free subscription rate for the first time since January of 2022.

Of 45 analysts covering the stock, 24 have a Buy or Strong Buy rating. Another 19 have Hold ratings. At a share price of around $361.00, the stock potential upside based on a median price target of $457.50 is 26.7%. At the high price target of $600.00, the upside potential is about 66.2%.

Third-quarter revenue is forecast at $8.54 billion, up 4.3% sequentially and 7.7% higher year over year. Adjusted EPS are forecast at $3.48, up 5.7% sequentially and by 12.3% year over year. For the full 2023 fiscal year, analysts expect to see EPS of $11.85, up 19.1%, on sales of $33.72 billion, up 6.6%.

Netflix shares trade at 30.5 times expected 2023 EPS, 23.9 times estimated 2024 earnings of $15.07 and 19.5 times estimated 2025 earnings of $18.50 per share. The 52-week trading range is $234.40 to $485.00. Netflix does not pay a dividend. Total shareholder return for the past 12 months was 56.88%.

Tesla

Since the beginning of the year, shares of Tesla Inc. (NASDAQ: TSLA) have added more than 106%, wiping out memories of the stock’s massive share price decline in the fourth quarter of last year and lifting the stock price by nearly 24% over the past 12 months.

The stock trades an average of more than 100 million shares a day. It is the most-held stock by retail investors, a notoriously opinionated bunch. They will want to hear that Tesla is going to begin delivering Cybertrucks any day now. Analysts are going to want to hear about margins, given Tesla’s apparently endless round of price cuts.

Sentiment toward Tesla remains moderately bullish. Of 40 analysts covering the stock, 16 have a Buy or a Strong Buy rating, and 19 more have a Hold rating. At a share price of around $254.00, the potential gain based on a median price target of $268.50 is 5.7%. Based on a high price target of $400.00, the upside potential is 57.5%.

Analysts expect Tesla to post third-quarter revenue of $24.15 billion, down 3.1% sequentially but 12.6% higher year over year. Analysts forecast adjusted EPS of $0.74, down 18.7% sequentially and by 29.5% year over year. For the full 2023 fiscal year, estimates call for EPS of $3.38, down 16.9%, on sales of $99.28 billion, up 21.9%.

Tesla stock trades at 75.1 times expected 2023 EPS, 54.5 times estimated 2024 earnings of $4.66 and 42.8 times estimated 2025 earnings of $5.93. The 52-week range is $101.81 to $299.29. Tesla does not pay a dividend. Total shareholder return over the past year was 23.87%.

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