The three major U.S. equity indexes closed higher on Tuesday, courtesy of a weaker dollar and an expected rise in U.S. crude inventories that sent oil prices lower early in the day. Add in overall bearishness from fund managers, and discounted equities looked like a good deal. The Dow Jones industrials closed up 2.4%, the S&P 500 rose 2.8%, and the Nasdaq jumped by 3.1%. All 11 S&P sectors closed lower. Industrials and communications services (up 3.6%) led, while utilities lagged (up 0.6%).

The monthly report on existing home sales from the National Association of Realtors came in lower than expected, and the U.S. oil inventory report showed oil stockpiles down by 400,000 barrels week over week and gasoline supplies up by 3.5 million barrels. In early Wednesday trading, the Dow was a shade lower while the S&P 500 and the Nasdaq both traded higher.

After markets closed Tuesday, Netflix beat analysts’ consensus profit estimate but missed the revenue projection. The big news was that the company lost less than half the 2 million subscribers it expected to lose in the quarter. The stock traded up 3.7% an hour after Wednesday’s opening bell.

Omnicom reported better-than-expected earnings and revenue. Shares of the communications company traded up by about 3% in Wednesday’s premarket.

Before markets opened on Wednesday, semiconductor equipment maker ASML reported better than expected earnings per share (EPS) and revenue. Downside guidance for the third quarter and full-year revenue offset the good news, but shares traded up about 1.8% Wednesday morning.

Abbott Labs beat earnings and revenue estimates and raised full-year EPS guidance. The stock traded down more than 1.7% in Wednesday’s premarket, likely due to continuing concern over infant formula sales.

Baker Hughes missed estimates on both the top and bottom lines, and shares plunged by around 13%.

Here are our previews of five companies set to report quarterly results after markets close on Wednesday: Kinder Morgan, Las Vegas Sands, Steel Dynamics, Tesla and United Airlines. First thing Thursday morning, American Airlines, AT&T, D.R. Horton, Freeport-McMoRan and Philip Morris will share quarterly results. These four companies, American Express, Snap, Twitter and Verizon, will report results late Thursday or before U.S. markets open on Friday.

Here is a look at three more firms set to report results Friday morning.

Cleveland-Cliffs

Shares of iron ore miner and steelmaker Cleveland-Cliffs Inc. (NYSE: CLF) have plunged nearly 50% from a 52-week high posted in early April. The stock has dropped by 17.5% over the past 12 months, and the 52-week low was posted just last week.

Investors fearing a recession have avoided commodity stocks nearly as completely as commodity traders have. Steel prices have dropped 30% so far in 2022, and iron ore prices are down nearly 55%. The company’s foray into steelmaking with the December 2020 acquisition of AK Steel worked to drive the share higher — until it didn’t. Rising energy costs have added to the company’s recent woes.

Of 11 brokerages covering the stock, six have a Buy or Strong Buy rating and the rest rate the shares at Hold. At a recent share price of around $16.50 a share, the implied gain based on a median price target of $24.00 is 45.5%. At the high price target of $39.00, the upside potential is 136.4%.
Analysts forecast second-quarter revenue of $6.13 billion, which would be up 3% sequentially and by 21.6% year over year. Adjusted EPS are forecast at $1.29, down 17.7% sequentially and 9.8% lower year over year. For the full 2022 fiscal year, analysts expect to see EPS of $5.58, down 3.6%, on sales of $23.89 billion, up nearly 17%.

The stock trades at 2.9 times expected 2022 EPS, 5.0 times estimated 2023 earnings of $3.31 and 4.7 times estimated 2024 earnings of $3.52 per share. The stock’s 52-week trading range is $14.31 to $34.04, and the company does not pay an annual dividend. Total shareholder return over the past year was negative 18%.

NextEra Energy

Shares of regulated electricity company NextEra Energy Inc. (NYSE: NEE) have risen by about 4.4% over the past 12 months. The Florida-based utility is the world’s largest producer of electricity using solar and wind energy and, in April, it reported a backlog of more than 18,000 megawatts of renewable energy projects. A two-year delay in new tariffs on imported solar modules boosted the stock price, but rising costs have recently given investors a reason to look more carefully at the company’s near-term prospects.

Of the 20 ratings on NextEra stock, 15 are Buy or Strong Buy. The other analysts rate the shares at Hold. At a price of around $78.20 a share, the upside potential based on a median price target of $90.00 is about 15%. At the high price target of $111.00, the implied gain is almost 42%.

Second-quarter revenue is forecast to come in at $5.26 billion, up 82.2% sequentially and 33.8% higher year over year. Adjusted EPS are forecast at $0.75, up nearly 1.4% sequentially and by 5.6% year over year. For full fiscal 2022, current estimates call for EPS of $2.86, up 12.1%, on sales of $20.97 billion, up 22.8%.

NextEra shares trade at 27.3 times expected 2022 EPS, 25.4 times estimated 2023 earnings of $3.08 and 23.3 times estimated 2024 earnings of $3.35 per share. The stock’s 52-week range is $67.22 to $93.73, and NextEra pays an annual dividend of $1.62 (yield of 2.05%). Total shareholder return over the past 12 months was 3.2%.

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Schlumberger

The largest U.S.-based oilfield services company, Schlumberger Ltd. (NYSE: SLB), has seen its stock price rise by about 30% over the past 12 months, well below the gains posted by its two main rivals, Baker Hughes and Halliburton. Last month, a Saudi oilfield services company in which Schlumberger holds a 79% stake received approval to list 30% of its shares on Saudi Arabia’s Tadawul stock exchange. The total value of the Saudi company is about $1.4 billion.

Analysts remain solidly bullish on Schlumberger. Of 29 brokerages covering the stock, 26 have a Buy or Strong Buy and the others rate the shares at Hold. At a share price of around $33.30, the implied upside based on a median price target of $50.00 is about 50.2%. At the high target of $59.00, the upside potential is 77.2%.

Second-quarter revenue is forecast at $6.28 billion, up 5.4% sequentially and by 11.5% year over year. Adjusted EPS are forecast at $0.40, up 17.6% sequentially and 33% higher year over year. For the full 2022 fiscal year, analysts expect Schlumberger to post EPS of $1.87, up 46.5%, on sales of $26.2 billion, up 14.3%.

Schlumberger shares trade at 17.9 times expected 2022 EPS, 12.6 times estimated 2023 earnings of $2.67 and 10.7 times estimated 2024 earnings of $3.12 per share. The stock’s 52-week range is $25.89 to $49.83. Schlumberger pays an annual dividend of $0.50 (yield of 2.09%). Over the past 12 months, total shareholder return was 25.1%.

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