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Earnings Reports Due Early Next Week From 3M, Cleveland-Cliffs, Halliburton, RTX

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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 1.8% half an hour after Friday’s opening bell.

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 by about 5.3%.

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% 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% Friday morning.

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

Next Week’s Fast Start

Here is a look at four earnings reports on the calendar for Monday afternoon or Tuesday morning.

3M

Over the past 12 months, shares of Dow Jones industrial average component 3M Co. (NYSE: MMM) have tumbled by almost 24%. 3M was among our Dogs of the Dow for 2023, one of 10 Dow stocks paying the highest dividend, largely as a result of a falling share price. The stock price has dropped about 27.4% so far in 2023, second only to Walgreens as the leading loser among the Dow 30.

After settling water contamination litigation for $12.5 billion in the prior quarter, 3M has settled another case for $6 billion. That’s the one related to knowingly selling defective earplugs to the U.S. military. 3M reports results before markets open on Tuesday.

Analyst sentiment reflects the company’s woes. Of 19 brokerages covering the stock, 16 have a Hold rating. There is one Strong Buy rating and two Sell or Strong Sell ratings. At a per-share price of around $87.00, the upside potential based on a median price target of $112.00 is 28.7%. At the high target of $157.00, the upside potential is 80.5%.

The consensus revenue estimate for the third quarter is $8.03 billion, which would be down 3.5% sequentially and 6.8% lower year over year. Adjusted EPS are forecast at $2.35, a sequential increase of 8.1%, and a year-over-year decline of 12.6%. For the 2023 fiscal year, analysts are looking for EPS to decline by 12.1% to $8.88 on a revenue decline of 7.3% to $31.72 billion.

3M stock trades at 9.8 times expected 2023 EPS, 9.0 times estimated 2024 earnings of $9.62 and 8.4 times estimated 2025 earnings of $10.38 per share. The stock’s 52-week trading range is $86.33 to $133.91, and 3M pays an annual dividend of $6.00 (yield of 6.79%). Total shareholder return for the past 12 months was negative 19.48.

Cleveland-Cliffs

Shares of iron ore miner and steelmaker Cleveland-Cliffs Inc. (NYSE: CLF) have dropped by about 2% over the past 12 months, including a drop of almost 10% so far in 2023. Cliffs reports quarterly results after U.S. markets close Monday.

Steel prices are down by 2% for the year as well, while iron ore has added more than 22% over the past 12 months. But all that takes second place compared to Cliffs’ July offer to buy U.S. Steel for around $35 a share in cash and Cliffs stock. U.S. Steel was trading at around $22.70 at the time of the bid. U.S. Steel CEO David Burritt called the offer “unreasonable.”

Of nine brokerages covering the stock, five have put a Buy or Strong Buy rating on the shares, and the others rate the stock at Hold. At a price of around $14.50 a share, the implied gain based on a median price target of $19.40 is 33.8%. At the high price target of $25.00, the upside potential is 72.4%.

Analysts forecast third-quarter revenue of $5.53 billion, down 7.5% sequentially and by 2.1% year over year. Analysts are forecasting adjusted EPS of $0.44, down 35.8% sequentially but up 51.7% year over year. For the full 2023 fiscal year, analysts expect Cliffs to report EPS of $1.46, down 47.4%, on sales of $21.89 billion, down 4.8%.

Cliffs stock trades at 10.0 times expected 2023 EPS, 7.5 times estimated 2024 earnings of $1.95 and 5.8 times estimated 2025 earnings of $2.52 per share. The 52-week trading range is $11.82 to $22.83, and the company does not pay an annual dividend. Total shareholder return over the past year was negative 1.89%.

Halliburton

Oilfield services firm Halliburton Co. (NYSE: HAL) has seen its share price rise by more than 35% over the past 12 months, including a year-to-date increase of almost 10%. Over the past three months, shares have jumped by nearly 27%. The company reports results early Tuesday.

For the second time this month, U.S. crude trades above $90 a barrel, up by $10 over the price two months ago. Volatile crude prices did not help Schlumberger much in the quarter, and it may not help Halliburton much either.

Of 30 analysts covering the stock, 27 have a Buy or Strong Buy rating and the other three rate the shares at Hold. At a share price of around $43.00, the upside potential based on a median price target of $48.00 is about 11.6%. At the high target of $56.00, the implied gain is about 30.2%.

Third-quarter revenue is forecast to come in at $5.85 billion, up 0.9% sequentially and by 9.1% year over year. Adjusted EPS are forecast at $0.77, flat sequentially and up 58.3% year over year. For the 2023 fiscal year, analysts anticipate EPS of $3.04, up 41.4%, on sales of $23.28 billion, up 14.7%.

Halliburton stock trades at 14.22 times expected 2023 EPS, 12.6 times estimated 2024 earnings of $3.44 and 11.1 times estimated 2025 earnings of $3.91 per share. The 52-week trading range is $27.84 to $43.85, and the company pays an annual dividend of $0.64 (yield of 1.48%). Halliburton’s total shareholder return for the past year was 37.65%.

RTX

Defense contractor RTX Corp. (NYSE: RTX) was known as Raytheon Technologies until changing its name in July. The name change has not helped the stock. For the past 12 months, ‌shares were down almost 16%. For the past three months, shares were down almost 23%.

With Lockheed Martin and Boeing, RTX is the only U.S. defense contractor with a market cap above $100 billion. RTX’s dividend yield is higher than any of the contractors and its gross margin of around 20% generated $5.3 billion in operating cash flow over the past 12 months. Its free cash flow for the period totaled $2.85 billion, while cash and equivalents stacked up $5.4 billion. RTX reports quarterly results on Tuesday.

Of 26 analysts covering the stock, 11 have a Buy or Strong Buy rating, and 13 rate the stock a Hold. At a share price of around $74.00, the upside potential based on a median price target of $85.50 is 15.5%. At the high price target of $111.00, the upside potential is 50%.

Analysts expect RTX to report first-quarter revenue of $18.2 billion, down 0.6% sequentially but 7.4% higher year over year. Adjusted EPS are expected to reach $1.22, down 5.6% sequentially and up a penny year over year. For the 2023 fiscal year, EPS are pegged at $5.02, up 5%, on revenue of $72.98 billion, up 8.8%.

RTX stock trades at 14.7 times expected 2023 EPS, 13.2 times estimated 2024 earnings of $5.58 and 11.3 times estimated 2025 earnings of $6.56 per share. The 52-week range is $68.56 to $108.84. RTX pays an annual dividend of $2.36 (yield of 3.18%). Total shareholder return over the past 12 months was negative 13.60%.

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