The three major U.S. equity indexes closed lower on Thursday, following a choppy trading session that turned gains into losses by noon. The Dow Jones industrials ended the day down 0.3%, the S&P 500 closed 0.8% lower, and the Nasdaq dipped by 0.61%. Eight of 11 sectors closed lower, with utilities (2.51%) and industrials (1.91%) posting the biggest losses. The only gains were seen in communications services (0.36%), energy (0.18%) and tech (0.07%).
The weekly report on new claims for jobless benefits came in below expectations Thursday morning, and below the prior week’s total. Existing home sales were lower month over month in September, and that probably led to the downturn in share prices in the late morning.
All three major indexes opened lower Friday but had bounced into positive territory shortly before noon.
After markets closed Thursday, CSX reported better-than-expected adjusted earnings per share (EPS) and revenues. The stock traded up about 0.8% late Friday morning.
Snap beat EPS estimates but missed slightly on revenue. A weak outlook for the current quarter was sinking the shares Friday morning. The stock was down about 30%.
Before markets opened on Friday, Verizon beat both top-line and bottom-line estimates. Verizon missed estimates for new subscriptions and shares are being punished, down more than 6% late Friday morning.
American Express beat the consensus EPS estimate but missed the revenue estimate by about $25 million. Even though revenue was up 24% year over year, investors did not see enough. Shares traded down about 6.2%.
Schlumberger beat estimates on both the top and bottom lines. Shares traded up about 5.8% just before noon Friday.
Cadence Design, Discover Financial and Range Resources are scheduled to report quarterly results after U.S. markets close on Monday.
Here is a look at four companies on deck to report results first thing Tuesday morning.
General Electric
Over the past 12 months, shares of General Electric Co. (NYSE: GE) have slipped by more than 31%. The shares dipped to their 52-week low in early July and have bounced higher and lower again since then.
Last November, GE said it planned to spin off its health care and energy businesses into separate companies and become primarily an aviation company. GE is downsizing its corporate headquarters in Boston, leaving Manhattan, and looking for a buyer for its campus in Crotonville, New York. The Financial Times reported last week that France’s EDF is offering a low-ball price ($160 million to $180 million) for GE’s nuclear turbine business due to the segment’s dealings with Russia’s Rosatom.
Analysts remain bullish on the stock. There are 16 Buy or Strong Buy ratings and six Hold ratings among the 22 brokerages covering GE. At a recent price of around $70.50 a share, the potential upside to a median price target of $84.00 is about 19.1%. At the high target of $122.00, the upside potential is 73%.
Third-quarter revenue is forecast at $18.81 billion, which would be up about 0.9% sequentially and 2.1% higher year over year. Adjusted EPS are forecast at $0.49, down 37.6% sequentially and by 14.0% year over year. For the full 2022 fiscal year, analysts expect GE to report EPS of $2.68, up 26.5%, on sales of $74.78 billion, up 0.8%.
GE stock trades at about 15.6 times expected 2022 EPS, 11.7 times estimated 2023 earnings of $6.04 and 8.4 times estimated 2024 earnings of $8.37 per share. The stock’s 52-week trading range is $59.93 to $116.17, and GE pays an annual dividend of $0.32 (yield of 0.46%). Total shareholder return for the past 12 months was negative 31.2%.
General Motors
General Motors Co. (NYSE: GM) has had a tough 2022. The stock price is down about 42% over the past year, including a bounce of about 5.5% since the beginning of the month.
Last week the company announced plans to offer energy storage and management services to residential and commercial customers through a new segment called GM Energy. That puts the venerable firm in direct competition with Tesla on ground that Tesla knows well. GM thinks its competencies in electric vehicles will transfer cleanly to a wider market. Risky business.
Analysts like the company’s prospects. Of 23 brokers covering the stock, 15 have a Buy or Strong Buy rating on the shares and another seven rate the shares at Hold. At a share price of around $33.90, the upside potential based on a median price target of $45.00 is 32.7%. At the high price target of $90.00, the upside potential is about 165%.
Third-quarter revenue is forecast at $42.17 billion, up nearly 18% sequentially and 57.5% higher year over year. Adjusted EPS are forecast at $1.88, up nearly 65% sequentially and by 23.7% year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $6.78, down 4.1%, on revenue of $154.77 billion, up 21.9%.
GM stock trades at about 5.0 times expected 2022 EPS, 5.5 times estimated 2023 earnings of $6.21 and 5.4 times estimated 2024 earnings of $6.26 per share. The stock’s 52-week range is $30.33 to $67.21. GM does not pay a dividend, and total shareholder return for the past year was negative 41.8%.
UPS
United Parcel Service Inc. (NYSE: UPS) stock has dropped about 16.4% over the past 12 months, including a plunge of nearly 24% between mid-August and last week, when it set a new 52-week low. When rival FedEx warned on its quarterly earnings last month, UPS stock took a beating as well. FedEx also said earlier this month that its segment that handles e-commerce deliveries has been experiencing lower volume. UPS has not said anything yet about the holiday season, but it is a sure bet it will come up Tuesday.
Analysts remain somewhat bullish on UPS stock, with 13 of 30 giving the shares a Buy or Strong Buy rating and 15 others rating the stock at Hold. At a share price of around $162.50, the upside potential based on a median price target of $199.00 is 22.5%. At the high price target of $251.00, the upside potential is 54.5%.
Analysts expect UPS to report third-quarter revenue of $24.33 billion, down about 1.8% sequentially and 5% lower year over year. Adjusted EPS are pegged at $2.85, down 13.3% sequentially but up about 5.2% year over year. For the full 2022 fiscal year, analysts are looking for EPS of $12.78, up 5.4%, on sales of $101.64 billion, up 4.5%.
UPS stock trades at about 12.7 times expected 2022 EPS, 12.9 times estimated 2023 earnings of $12.63 and 12.3 times estimated 2024 earnings of $13.24 per share. The stock’s 52-week range is $154.87 to $233.72. UPS pays an annual dividend of $6.08 (yield of 3.78%). Total shareholder return for the past 12 months was negative 16.2%.
Valero Energy
Oil refiner and product marketer Valero Energy Corp. (NYSE: VLO) has seen its share price increase by about 55% over the past year. The 52-week low was posted in mid-December, and the share price had more than doubled by mid-June. Since then, however, shares are down about 13%.
Earlier this month, California Energy Commission Chairman David Hochschild asked the state’s refiners why pump prices had surged to more than $6.40 a gallon when crude prices dropped by $10 a barrel. Hochschild also wants to know why refinery profits nearly tripled in September when the price of crude to refineries fell by more than 20%. In a response, Valero cited maintenance and supply issues.
Of the 20 analysts covering the stock, 15 have a Buy or Strong Buy rating and four have a Hold rating. At a share price of around $125.50, the upside potential based on a median price target of $135.00 is 7.6%. At the high price target of $158.00, the upside potential is around 25.9%.
Analysts are forecasting third-quarter revenue of $41.16 billion, down 20.3% sequentially but up 39.4% year over year. Adjusted EPS are pegged at $6.94, down 39% sequentially and up nearly 470% year over year. For the full 2022 fiscal year, current estimates call for EPS of $25.43, up 805.1%, on revenue of $174.36 billion, up 53%.
Valero stock trades at about 4.9 times expected 2022 EPS, 8.1 times estimated 2023 earnings of $15.47 and 10.9 times estimated 2024 earnings of $11.52 per share. The stock’s 52-week range is $65.13 to $146.81. The company pays an annual dividend of $3.92 (yield of 3.15%). Total shareholder return for the past 12 months was about 59.4%.
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