Investing

Earnings Preview: Boeing, Cameco, Kraft Heinz, T-Mobile

Paul Ausick

Published: July 25, 2022 11:37 am

Last Updated: August 30, 2022 12:20 pm

All three major U.S. equity indexes closed lower on Friday. The Dow Jones Industrial Average slipped 0.43%%, the S&P 500 was off 0.93%, and the Nasdaq Composite fell 1.87%. Eight of 11 sectors, led by communications services (down 4.34%) and technology (down 1.38%) closed lower while the utilities sector (up 1.37%) was the leading gainer. This week we’ll get earnings reports from the largest U.S. tech companies and a rate hike (or not) announcement from the Federal Reserve. The report on personal consumption expenditures (PCE) comes out Friday. In early trading Monday morning, the three major indexes trade mixed, with the Dow and the Standard & Poor’s 500 trading slightly higher and the Nasdaq trading lower.

Before markets opened Monday morning, copper and gold miner Newmont missed the consensus earnings per share (EPS ) estimate and lowered its outlook on production which, in turn, raised its production costs. Shares traded down nearly 10%

NXP Semiconductors and Range Resources will report quarterly results after markets close Monday. Before markets open Tuesday morning, Coca-Cola, General Electric, McDonald’s, and 3M Company.

Earlier this morning, we previewed four companies that will report quarterly results after markets close Tuesday afternoon: Alphabet, Microsoft, Texas Instruments, and Visa.

Here’s a look at four companies set to report results before markets open Wednesday morning.

Boeing

Since reaching a 12-month high in mid-August, shares of Boeing Co. (NYSE: BA) are down by 36%. The stock gained about 7% last week after announcing orders for 278 737 Max jets, nine 787s, and two 777-8Fs at the Farnborough Airshow in England. Since the 737 Max was recertified in November, Boeing has received orders for more than 1,000 of the single-aisle planes. Boeing had expected to return production of the Max to 31 per month by early this year, but so far, that total has remained elusive. Dow 30 component Boeing should have something to say about production in its earnings report and on the conference call.

Of 23 analysts covering the stock, 18 have a Buy or Strong Buy rating, and two more have given the shares a Hold rating. At a current price of around $155.50, the implied upside based on a median price target of $204.50 is 34.5%. At the high target of $298.00, the implied upside is about 91.6%.

Consensus estimates call for second-quarter revenue of $17.52 billion, up 25.3% sequentially and up about 3.1% year over year. Analysts are forecasting a quarterly loss per share of $0.11 compared with a loss of $2.75 in the prior quarter and EPS of $0.40 last year. For the full 2022 fiscal year, Boeing is expected to post a loss of $1.12 per share compared with last year’s loss of $9.44. Revenue is expected to increase by 20.1% to $74.8 billion.

Boeing stock trades at a multiple of 28.9 times estimated 2023earnings of $5.39 and 19 times estimated 2024 earnings of $8.21 per share. The stock’s 52-week range is $113.02 to $241.15. Boeing has suspended its dividend, and total shareholder return for the past year was negative 29.6%.

Cameco

Over the past year, uranium producer Cameco Corp. (NYSE: CCJ) has seen its share price rise by nearly 33%. At its peak in mid-April, the stock was trading at a level it hadn’t seen in nearly 11 years. Since the April peak, uranium prices have dropped by nearly $11 a pound (about 27%), and Cameco stock has dropped by about 28%. Uranium prices have increased by about 44% over the past year. At some point, demand for uranium is expected to rise as new smaller, modular reactors are brought into service. That could take several years yet, but Cameco is certain to be around as that happens.

Analysts are solidly bullish on Cameco stock. All 12 brokerages covering the company have given the stock a Buy or Strong Buy rating. At the current price of around $22.70, the upside potential based on a median price target of $32.63 is 43.7%. At the high price target of $36.30, the upside potential is nearly 60%.

Second-quarter revenue is forecast at $384.44 million, up 20.8% sequentially and up 32.8% year over year. Analysts expect Cameco to break even for the quarter, down 90% sequentially and better than the year-ago loss of $0.08 per share. For the full fiscal 2022 year, EPS is currently forecast at $0.21, better than the $0.20 per share loss last year, on sales of  $1.43 billion, up 22.8%.

Cameco stock trades at 108.2 times expected 2022 earnings, 28.4 times estimated 2023 earnings of $0.80 per share, and 30.4 times estimated 2024 earnings of $0.75 per share. The stock’s 52-week range is $15.34 to $32.49. Cameco pays an annual dividend of $0.09 (yield of 0.42%). Total shareholder return for the past year was 33.3%.

Kraft Heinz

The Kraft Heinz Co. (NASDAQ: KHC) has added about 1.5% to its share price over the past 12 months. While that represents a decline over the course of the second quarter, the consumer staples giant pays a fat dividend that keeps shareholders like Warren Buffett happy. A recent analyst upgrade noted that demand for the company’s products is expected to stay strong because of both its wealthier customers and its strength among young consumers.

Analysts, in general, are not so optimistic. Of 20 brokerages covering the stock,11 give the stock a Hold rating, and just six have a Buy or Strong Buy rating on the stock. At a current price of around $38.20, the upside potential based on a median price target of $45.00 is 17.8%. At the high price target of $51, the upside potential is 33.5%.

Kraft Heinz is expected to post second-quarter revenue of $6.36 billion, up 5.3% sequentially and down 3.9% year over year. Adjusted EPS is forecast at $0.68, up 13.7% sequentially and down 12.8% year over year. For the full 2022 fiscal year, analysts are looking for EPS of $2.67, down 8.9% year over year, on revenue of $25.58 billion, down by 1.8%.

The company’s stock trades at a multiple of 14.3 times expected 2022 EPS, 13.8 times estimated 2023 earnings of $2.77, and 13.4 times estimated 2024 earnings of $2.85 per share. The stock’s 52-week range is $32.78 to $44.87. Kraft Heinz pays an annual dividend of $1.60 (yield of 4.18%). The total shareholder return for the past 12 months was 1.6%.

T-Mobile

T-Mobile US Inc. (NASDAQ: TMUS) posted its 52-week high on July 29 of last year. Since then, the share price has dropped by 7.4%, the same amount as AT&T’s drop since that date and less than half the nearly 17% drop in Verizon’s share price. T-Mobile is expected to report higher subscriber growth than either of its major rivals, but costs associated with its integration of Sprint are likely to weigh on profits.

Analysts are nearly unanimously bullish on the stock, with 30 of 32 giving the shares a Buy or Strong Buy rating and another giving the stock a Hold rating. At a current price of around $133.70, the implied gain based on a median price target of $164.45 is about 23%. At the high target of $230, the implied gain is nearly 72%.

Second-quarter revenue is forecast at $20.09 billion, down less than 1% sequentially and up less than 1% year over year. Adjusted EPS is pegged at $0.40, down 71.5% sequentially and down 57.4% year over year. For the full 2022 fiscal year, analysts have forecast EPS of $3.22, down 24.5%, on sales of $81.29 billion, up 1.5%.

T-Mobile stock trades at a multiple of 41.6 times expected 2022 EPS, 21.6 times estimated 2023 earnings of $6.21, and 13.9 times estimated 2024 earnings of $9.65 per share. The stock’s 52-week range is $101.51 to $146.92. The company does not pay a dividend and total shareholder return for the past 12 months was negative 6.9%.