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Archer Daniels Midland, Coca-Cola, Verizon Earnings Reports Due Tuesday Morning

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Nearly 1,500 U.S.-traded companies will be releasing quarterly earnings reports next week. The week after next, we expect reports from more than 2,000 publicly traded companies. Earnings season peaks over the next few weeks. Stay tuned.

Thursday Afternoon’s Reports

After markets closed Thursday, CSX reported third-quarter revenue that was slightly above the consensus estimate and 8.3% below year-ago sales. However, the railroad operator missed the consensus earnings per share (EPS) forecast by a penny. The company’s operating ratio (expenses as a percentage of revenue) rose to 63.8% year over year. That’s not good. Shares traded up 1.4% in mid-morning trading Friday.

Intuitive Surgical reported better-than-expected EPS but missed the consensus revenue estimate. Revenue was up 12% year over year, however. The medical robotics company also lowered the high end of its forecast for fiscal 2023 pro-forma gross margin from 69% to 68.5%. The low end remains at 68%. The stock traded down 4.6%.

Friday Morning’s Reports

Before U.S. markets opened on Friday, American Express beat consensus estimates on both the top and bottom lines. Spending growth boosted the results, but may also be a warning to investors who might wonder if consumer spending will be as robust going forward. The stock traded down by about 3.8% Friday morning.

Schlumberger beat the consensus EPS estimate by a penny and missed slightly the consensus revenue estimate. Year over year, the oilfield services giant’s revenue rose by more than 11%, and EPS was up 18.2%. Not good enough for investors. The stock traded down 4.1% Friday morning.

There are no notable earnings reports on the release calendar for Friday afternoon or Monday morning.

On Deck

3M, Cleveland-Cliffs, Halliburton, RTX will be reporting results after markets close on Monday or early Tuesday morning.

Here is a look at three earnings reports on the calendar for Tuesday morning.

Archer Daniels Midland

Ag products supplier Archer Daniels Midland Co. (NYSE: ADM) has seen its share price decrease by more than 16% over the past 12 months. Since last November, when the stock posted an all-time high of nearly $99.00, shares have dropped by a third.

It is hard to square that with an unbroken string of EPS beats since October 2019 and revenue beats in all but four of those 16 quarters. Just looking at the charts indicates a stock that may be undervalued or, at best, priced at fair value. Is this an opportunity? What the company has to say about cash flow could indicate what the company thinks about the future.

Of 16 brokerages covering the stock, nine have a Buy or Strong Buy ratings, and another six have Hold ratings. At a share price of around $74.00, the potential upside based on a median price target of $95.50 is 29.1%. At the high price target of $117.00, the upside potential is 58.1%.

Third-quarter revenue is forecast to total $23.64 billion, which would be down 6.1% sequentially and 4.2% lower year over year. Adjusted EPS are forecast at $1.54, down 18.5% sequentially and by 17.2% year over year. For fiscal 2023, EPS are forecast at $7.22, down 8.1%, on sales of $97.71 billion, down about 4.1%.

ADM stock trades at 10.2 times expected 2023 EPS, 11.2 times estimated 2024 earnings of $6.58 and 11.4 times estimated 2025 earnings of $6.47 per share. The 52-week trading range is $69.92 to $98.28. The company pays an annual dividend of $1.80 (yield of 2.42%). Total shareholder return for the past year was negative 14.65%.

Coca-Cola

Dow Jones industrial average component and Warren Buffett favorite Coca-Cola Co. (NYSE: KO) has posted a share price decrease of about 2.9% over the past 12 months. For the year to date, the stock is down by 14.6%.

What Buffett and other investors in Coke are particularly fond of is the company’s annual cash flow of some $10 billion and free cash flow of $9.5 billion. That is plenty of cash to share in the form of buybacks and dividend payments. Investors will be paying close attention to sales volume, expecting to see something better than the flat performance reported for the previous quarter. Coke has raised prices by about as much as it reasonably can. Now, it needs to sell more.

Analysts are bullish on the stock, with 18 of 24 brokerages having a Buy or Strong Buy rating. The other six have Hold ratings on the shares. At a share price of around $54.60, the upside potential based on a median price target of $67.00 is 22.7%. At the high price target of $75.00, the upside potential is 37.4%.

Third-quarter revenue is forecast at $11.43 billion, down 4.5% sequentially but up 3.0% year over year. Adjusted EPS are pegged at $0.69, down 10.9% sequentially and flat year over year. For the 2023 fiscal year, consensus estimates call for EPS of $2.63, up 6.2%, on revenue of $44.88 billion, up 4.3%.

Coca-Cola stock trades at 20.8 times expected 2023 EPS, 19.7 times estimated 2024 earnings of $2.79 and 18.5 times estimated 2025 earnings of $2.97 per share. The 52-week trading range is $51.55 to $64.99. Coca-Cola pays an annual dividend of $1.84 (yield of 3.39%). Total shareholder return for the past year was 1.10%.

Verizon

Dow stock Verizon Communications Inc. (NYSE: VZ) has dropped 12.9% from its share price over the past 12 months, including a plunge of more than 19% for the year to date.

Both Verizon and AT&T pay massive dividend yields, and investors will be more interested in how these two giants plan to keep cash flowing. When AT&T reported results Wednesday, the company raised its estimate of free cash flow for the year by $500 million to $16.5 billion. Verizon’s free cash flow at the end of the previous quarter totaled $14.8 billion, with $5.62 billion of that coming in the second quarter alone. Too bad both are saddled with enormous debt. Who knows what the dividends would be.

Analysts are cautious on the stock. Of 27 brokerages, only eight have Buy or Strong Buy ratings, and 18 have a Hold rating. At a share price of around $32.00, the implied gain based on a median price target of $39.00 is 21.9%. At the high price target of $64.00, the potential upside is 50%.

Third-quarter revenue is forecast to come in at $33.34 billion, up 2.3% sequentially and down 2.6% year over year. Adjusted EPS are forecast at $1.18, down 2.4% sequentially and down by 10.6% year over year. For the 2023 fiscal year, analysts expect Verizon to post EPS of $4.68, down 9.7%, on sales of $133.45 billion, down 2.5%.

Verizon stock trades at 6.8 times expected 2023 EPS, 6.9 times estimated 2024 earnings of $4.64, and 6.8 times estimated 2025 earnings of $4.71 per share. The 52-week trading range is $30.14 to $42.58. Verizon pays an annual dividend of $2.66 (yield of 8.57%). Total shareholder return over the past 12 months was negative 6.01%. Verizon was the top dog among 2023’s Dogs of the Dow and currently trails only Walgreens in the race to be 2024’s Top Dog.

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