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Earnings Previews: Apple, Block

Apple
Eric Thayer / Getty Images News via Getty Images

In the first half-hour of Wednesday’s regular trading, the Dow Jones industrials were down 0.1%, while the S&P 500 traded up 0.12% and the Nasdaq 0.28% higher.

After U.S. markets closed Tuesday, AMD reported better-than-expected earnings per share and revenue, but revenue fell by 9.1% year over year. Second-quarter revenue guidance was in line with the consensus range but about $1.35 billion below year-ago revenue of $6.55 billion. That AMD may clear a low bar was not impressing investors. Shares traded down about 5.7% in early action on Wednesday.

Caesars Entertainment missed the consensus earnings per share (EPS) estimate while topping forecast revenue. Shares traded up around 2.2% Wednesday morning.

Energy Transfer beat the consensus EPS estimate by a penny and missed on revenue. The company raised its full-year estimate of adjusted EBITDA due to an acquisition and increasing demand. Shares traded down 1.1%.

Ford beat estimates on the top and bottom lines. The company now reports internal combustion vehicles (Ford Blue) and electric vehicles (Ford Model e) separately. Ford Blue’s pretax profit of $2.62 billion was partially offset by a loss of $722 million in the EV division. In a regulatory filing Wednesday morning, the company said it would take restructuring charges of $1.5 billion to $2.0 billion this year as it departs unprofitable locations and cuts jobs. Shares traded up around 1.7%.

Before markets opened on Wednesday morning, Barrick Gold also beat top-line and bottom-line estimates. The company declared a first-quarter $0.10 dividend, equal to its payment for the fourth quarter. Barrick pays a variable dividend that was $0.20 for the year-ago first and second quarters. Shares traded up about 0.8%.

CVS Health also beat estimates on the top and bottom lines but issued downside EPS guidance for the 2023 fiscal year. The stock traded down about 3.2%.

Kraft Heinz beat both EPS and revenue estimates and raised EPS guidance for the full fiscal year. Shares traded up 2.5%.

Albemarle and Qualcomm are scheduled to report results after markets close Wednesday. The following morning, ConocoPhillips, Constellation Energy and Paramount Global will report quarterly results.

Here is a look at two companies set to report results after U.S. markets close on Thursday.

Apple

Apple Inc. (NASDAQ: AAPL) remains the world’s most valuable company, with a market cap of about $2.65 trillion, more than $400 billion above second-place Microsoft. Over the past 12 months, Apple shares have increased by about 6.7%, and since the beginning of the year, the stock has added 30%.

Last week, IDC reported that first-quarter smartphone shipments declined by 14.6% year over year. Apple’s market share rose from 18.0% to 20.5% over the period, and shipments declined by 2.3%, the smallest decline of any of the top five phone makers.

Of 45 analysts covering Apple, 34 have a Buy or Strong Buy rating and another nine rate it at Hold. At a recent price of around $168.50 a share, the upside potential based on a median price target of $174.50 is about 3.6%. At the high price target of $210.00, the upside potential is 24.6%.

Analysts expect the Dow component to report second-quarter fiscal 2023 revenue of $92.84 billion, which would be down 20.8% sequentially and by 4.6% year over year. Adjusted EPS are expected to come in at $1.43, down almost 24% sequentially and 5.9% lower year over year. For the full fiscal year that ends in September, analysts expect the company to report EPS of $5.97, down 2.3%, on sales of $389.2 billion, down 1.3%.

Apple stock trades at 28.2 times expected 2023 EPS, 25.6 times estimated 2024 earnings of $6.58 and 23.6 times estimated 2025 earnings of $7.14 per share. The stock’s 52-week trading range is $124.17 to $176.15. Apple pays an annual dividend of $0.92 (yield of 0.54%). Total shareholder return for the past 12 months was 7.34%.

Block

Over the past 12 months, Block Inc. (NYSE: SQ) has seen its share price fall by about 44%, including a decline of 8.1% since the beginning of the year. Since posting a 52-week low in early November, the shares have risen about 12.5%.

In late March, short seller Hindenburg Research issued a report on Block accusing the Jack Dorsey-led firm once known as Square of having “systematically taken advantage of the demographics it claims to be helping.” Block’s stock dropped nearly 15% on the day the report was released and has never recovered. The shares are down more than 20% since the report dropped. According to Fintel data, just 5.4% of Block’s float is sold short.

Analysts remain mostly bullish on the shares, with 32 of 45 brokerages having a rating of Buy or Strong Buy. Another 11 rate the stock at Hold. At a price of about $57.80 a share, the upside potential based on a median price target of $93.00 is 60.1%. At the high price of $150.00, the upside potential is almost 160%.

First-quarter revenue is forecast at $4.6 billion, up 54% sequentially and by 16.2% year over year. Adjusted EPS are expected to come in at $0.34, down 29% sequentially but up 88.9% year over year. For the full 2023 fiscal year, estimates call for EPS of $1.72, up 71.8%, on sales of $20.05 billion, up 14.4%.

Block’s shares trade at 33.5 times expected 2023 EPS, 23.7 times estimated 2024 earnings of $2.43 and 17.6 times estimated 2025 earnings of $3.27 per share. The stock’s 52-week range is $51.34 to $108.00. Block does not pay a dividend. The total shareholder return for the past year was negative 45.58%.

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