The three major U.S. equity indexes closed higher on Tuesday, following a more-or-less steady path higher after the bell. The Dow Jones industrials ended the day up 1.07%, the S&P 500 closed 1.63% higher and the Nasdaq rose 2.25%. Ten of 11 sectors closed higher, led by real estate (3.94%) and materials (2.53%). Energy (−0.05%) was the only laggard, but not by much.

Wednesday brings the monthly report on new home sales. The consensus estimate calls for 575,000 sales in September, down from August’s total of 685,000. The government report on crude oil inventories is due Wednesday morning. Late Tuesday, the American Petroleum Institute reported an inventory build of more than 4.5 million barrels for the week. Of that total, 3.4 million came from the Strategic Petroleum Reserve. The U.S. Energy Information Administration reported a build of 2.59 million barrels in the country’s crude oil stocks, not including a drawdown of 1.5 million barrels from the SPR.

The three major indexes traded mixed just ahead of the noon hour Wednesday. The Dow was up about 0.9%, the S&P was up about 0.4%, and the Nasdaq was down about 0.4%.

After U.S. markets closed Tuesday, Google parent Alphabet missed on both the top and bottom lines, and the search engine giant said it is realigning resources to focus on high-growth priorities. Shares traded about 6.8% lower Wednesday morning.

Microsoft beat adjusted earnings per share (EPS) and revenue estimates. Like Alphabet, Microsoft is sharpening its focus and “managing our cost structure.” The company’s Azure cloud business is forecast to post lower revenue growth in the current quarter, and that has pushed the stock down about 5.8% Wednesday.

Enphase beat on both the top and bottom lines and raised fourth-quarter revenue guidance. Shares traded up about 12.8% Wednesday morning.

Visa also beat top-line and bottom-line estimates. The financial services giant also authorized a new $12 billion buyback program and raised its dividend by 20%. Shares traded up by 5.5% early Wednesday.

Before markets opened Wednesday morning, Boeing missed on both the top and bottom lines. The aircraft maker posted a loss of $3.3 billion in the quarter. Free cash flow is on track to turn positive by the end of the year. Shares traded down less than 1%.

Bristol-Myers Squibb posted better-than-expected EPS and revenue and reaffirmed fiscal year guidance. Shares traded up about 2.3% Wednesday morning.

Kraft Heinz beat estimates on both the top and bottom lines and reaffirmed full-year organic sales growth in the high single digits. Shares traded up by less than 1% Wednesday.
After markets close Wednesday, Antero Resources, EQT, Ford and Meta Platforms will report quarterly results. Look for Altria, Cameco, Caterpillar and McDonald’s to report first thing Thursday morning. Later that day, Amazon, Apple, Intel, T-Mobile and U.S. Steel take their turns on the earnings stage.

Here is a preview of what analysts are expecting to hear Friday morning from these three companies.

Chevron

Over the past 12 months, shares of Chevron Corp. (NYSE: CVX) have risen by nearly 55%. Since peaking at around $124 a barrel in March, the price has dropped to below $90, a dip of about 27.5%.

Downstream profits (refining and marketing) are likely to drop by nearly 50% quarter over quarter while profits from natural gas sales are likely to be stronger. A recession could send the price tumbling, but that is still a possibility, not a cinch. All in all, Chevron and its peers are likely to continue doing well if not at quite the level of the previous two quarters.

Analysts’ sentiment remains strong for the stock. Of the 29 brokerages covering the stock, 16 have a Buy or Strong Buy rating and 12 have Hold ratings. At a recent share price of around $176.00, the upside potential based on a median price target of $180.00 is 2.2%. At the high price target of $202.00, the upside potential is 16.5%.

Third-quarter revenue is forecast at $61.44 billion, which would be down 10.6% sequentially but 37.4% higher year over year. Adjusted EPS are forecast at $4.85, down 16.6% sequentially and up 63.9% year over year. For the full 2022 year, analysts expect Chevron to post EPS of $18.42, up 126.5%, on revenue of $239.67 billion, up 47.5%.

Chevron stock trades at about 9.6 times expected 2022 EPS, 10.7 times estimated 2023 earnings of $16.55 and 12.6 times estimated 2024 earnings of $14.06 per share. The stock’s 52-week trading range is $110.73 to $182.40. Chevron pays an annual dividend of $5.68 (yield of 3.25%). Total shareholder return for the past 12 months was 61.3%.

Exxon Mobil

Shares of Exxon Mobil Corp. (NYSE: XOM) have risen by nearly two-thirds over the past 12 months. The company’s downstream profits are expected to drop by about a third sequentially, mostly due to lower prices for chemicals due to slowing demand. Exxon and Chevron have been returning cash to shareholders for several quarters now and are not likely to pause.
It also is unlikely that either Exxon or Chevron will accede to President Biden’s request for more production. While it may be convenient to call that simple greed, oil producers have to keep an eye on future demand, which is threatened by the increasingly rapid adoption of electric vehicles. Will demand come back to absorb new production or will that just be billions lost to demand destruction? Nobody knows.

Of 29 analysts covering the stock, 14 rate the shares at Hold, eight have a Strong Buy rating and six rate the shares at Buy. At a price of around $107.00 a share, the upside potential based on a median price target of $110.00 is 2.8%. At the high target of $134.00, the upside potential is 25.2%.

Third-quarter revenue is forecast at $102.96 billion, down 11% sequentially but 39.5% higher year over year. Adjusted EPS are pegged at $3.80, down 8.1% sequentially and up 140.5% year over year. For the full 2022 fiscal year, current estimates call for EPS of $13.04, up 142.3%, on sales of $415.4 billion, up 45.3%.

Exxon shares trade at about 8.2 times expected 2022 EPS, 10.1 times estimated 2023 earnings of $10.67 and 11.8 times estimated 2024 earnings of $9.14 per share. The stock’s 52-week range is $57.96 to $107.68, and Exxon pays an annual dividend of $3.52 (yield of 3.32%). Total shareholder return for the past 12 months was 70.5%.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

NextEra Energy

Shares of regulated electricity company NextEra Energy Inc. (NYSE: NEE) have declined by nearly 10% over the past 12 months. The Florida-based utility’s master limited partnership, NextEra Energy Partners, boosted its annual dividend by about 15% on Monday, in line with dividend increases over the past 3 years. NextEra owns about 45% of the MLP. Since mid-September, the share price has fallen by nearly 16.5% following a $2 billion convertible debt offering the company plans to use to expand its green generation capabilities. NextEra is already the world’s largest producer of electricity using solar and wind energy.

Of the 20 ratings on NextEra stock, 16 are Buy or Strong Buy. The other four analysts rate the shares at Hold. At a price of around $76.00 per share, the upside potential based on a median price target of $91.95 is about 21%. At the high price target of $102.80, the implied gain is 35.3%.

Third-quarter revenue is forecast to come in at $5.77 billion, up 11.4% sequentially and by 32.0% year over year. Adjusted EPS are forecast at $0.80, down about 0.7% sequentially but up 6.7% year over year. For the full 2022 fiscal year, current estimates call for EPS of $2.88, up 12.8%, on sales of $20.87 billion, up 22.3%.

NextEra shares trade at about 26.4 times expected 2022 EPS, 24.6 times estimated 2023 earnings of $3.09 and 22.6 times estimated 2024 earnings of $3.37 per share. The stock’s 52-week range is $67.22 to $93.73, and NextEra pays an annual dividend of $1.70 (yield of 2.37%). Total shareholder return over the past 12 months was negative 9.2%.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.