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Earnings Reports Due Before Markets Open Friday From American Express, Schlumberger

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Tech sector earnings season gets started after U.S. markets close on Wednesday, when Netflix and Tesla will release earnings reports. Many more will hit the tape next week.

Tuesday Afternoon’s Reports

After markets closed on Tuesday, J.B. Hunt missed consensus estimates for both earnings per share (EPS) and revenue. Revenue dipped 17.6% year over year, and EPS were down almost 30%. The stock traded down 8% in late-morning trading Wednesday.

Omnicom surpassed estimates on both the top and bottom lines. The advertising giant reiterated a 4% organic growth target for the full fiscal year. Shares traded down 2.1%.

United Airlines also beat top-line and bottom-line estimates. Revenue was up 12.6% year over year and EPS was up nearly 30%. Rising labor and fuel costs, however, remain a worry. The stock traded down 8.6% Wednesday morning.

Wednesday Morning’s Reports

Before U.S. markets opened on Wednesday, ASML posted better-than-expected EPS but missed on revenue. Fourth-quarter revenue guidance was in line with expectations, but gross margins were guided slightly below the third quarter’s 51.9% total. Shares traded down 4.5% late Wednesday morning.

Elevance Health beat the consensus EPS estimate but missed the revenue forecast, even though sales were 7.2% higher than last year. The health insurer guided full-year EPS to $33.00, above the consensus estimate of $32.93. The stock traded up 0.3%.

Morgan Stanley exceeded estimates on the top and bottom lines but commented that net interest income for the current quarter will continue to slide. Revenue was up 2.2% year over year. The stock traded down 7.7%.

Procter & Gamble also beat profit and sales estimates. Revenue was up 6.1% year over year, and EPS were up 16.6%. The consumer products behemoth guided full-year EPS at up 6% to 9% and revenue up 2% to 4%. Both were in line with analysts’ consensus estimates. Shares traded up 2.5%.

Coming Up

After markets close on Wednesday, Kinder Morgan, Netflix and Tesla are set to report quarterly results. First thing Thursday morning, American Airlines, AT&T and Freeport-McMoRan will release their earnings reports. Look for reports from CSX and Intuitive Surgical later on Thursday.

Here is a look at two earnings reports on the calendar for Friday morning.

American Express

American Express Co. (NYSE: AXP) has posted a 12-month share-price increase of 7.5%. The stock dropped almost 4% after reporting second-quarter results that missed the revenue estimate and included a sharp increase in reserves. Shares have dropped 13% over the past three months.

The news has not been that bad, though. Revenue has risen more or less steadily since the pandemic struck. Earnings per share reached a post-pandemic high in the second quarter. As a result, analysts have raised their expectations for the third quarter. Now Amex has to deliver.

Analysts remain lukewarm on the stock. Of 26 brokerages covering it, 10 have a Hold rating and 12 have a Buy or Strong Buy rating. At a recent price of around $153.00 a share, the implied gain based on a median price target of $179.00 is about 17%. At the high price target of $202.00, the upside potential rises to 32%.

Third-quarter revenue is forecast to rise sequentially by about 2.1% to $15.36 billion. That would be a jump of about 14.7% year over year. Adjusted EPS are pegged at $2.82, up 17.3% sequentially and 13.3% higher year over year. For the 2023 fiscal year, analysts are looking for EPS of $11.10, up 12.7%, on revenue of $60.69 billion, up 14.8%.

Amex stock trades at 13.8 times expected 2023 EPS, 12.4 times estimated 2024 earnings of $12.36 and 10.9 times estimated 2025 earnings of $14.03 per share. The 52-week trading range is $132.21 to $182.15, and American Express pays an annual dividend of $2.40 (yield of 1.55%). Total shareholder return for the past 12 months was 9.59%.

Schlumberger

The largest U.S.-based oilfield services company, Schlumberger Ltd. (NYSE: SLB), has seen its stock price rise by 42.2% over the past 12 months. Rivals Baker Hughes and Halliburton have posted slightly better gains of 50% and 45%, respectively.

U.S. and Canadian rig counts were down by 170 through the first week of October but up by 61 internationally at the end of August. U.S. production is up by about 1.2 million barrels a day year over year, even with so many fewer wells operating. After sinking to a three-month low earlier this month, Schlumberger stock has added 9.1% since.

Analysts remain solidly bullish on the stock. Of 32 brokerages covering it, 29 have a Buy or Strong Buy rating. The others rate it at Hold. At a share price of around $61.00, the implied upside based on a median price target of $68.00 is 11.5%. At the high target of $81.00, the upside potential is 32.8%.

Third-quarter revenue is forecast at $8.32 billion, up 2.8% sequentially and by 11.2% year over year. Analysts ‌forecast adjusted EPS at $0.77, up 6.7% sequentially and 22.2% higher year over year. For the 2023 fiscal year, analysts expect Schlumberger to post EPS of $2.97, up 36.2%, on sales of $32.96 billion, up 17.3%.

Schlumberger shares trade at 20.5 times expected 2023 EPS, 16.4 times estimated 2024 earnings of $3.70 and 13.9 times estimated 2025 earnings of $4.37 per share. The 52-week trading range is $42.55 to $62.78. Schlumberger pays an annual dividend of $1.00 (yield of 1.66%). Over the past 12 months, shareholder return totaled 42.59%.

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