The three major U.S. equity indexes closed higher on Tuesday. After a blistering start to the day, equities lost their steam as traders curbed their enthusiasm for the good consumer price index report. The Dow Jones industrials ended the day up 0.30%, while the S&P 500 closed 0.73% higher and the Nasdaq up 1.01%. Ten of 11 sectors closed higher, with real estate (2.04%) and energy (1.77%) adding the most. Consumer staples (−0.17%) was the day’s only loser.
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Wednesday morning, the U.S. Energy Information Administration (EIA) will issue its weekly report on petroleum inventories. Tuesday, the American Petroleum Institute reported crude inventories rose by 7.82 million barrels last week, largely thanks to a release of 4.7 million barrels from the Strategic Petroleum Reserve. Gasoline and distilled (diesel) stocks also rose.
The Federal Reserve’s Open Market Committee (FOMC) will end its two-day meeting Wednesday and announce its interest rate decision at 2 p.m. ET. Economists expect an interest rate increase of half a percentage point, from a current range of 3.75% to 4.00% to a new range of 4.25% to 4.50%.
On Thursday, the Census Bureau releases November data on retail sales. The consensus estimate calls for a decline of 0.2%, compared to an increase of 1.3% in October.
The three major indexes were trading slightly lower in Wednesday’s premarket.
Before U.S. markets opened on Wednesday, Scorpio Tankers issued a fourth-quarter update that was basically in line with expectations. The stock added about 1.8% in the premarket session.
Arqit Quantum traded down by about 2.6% after disclosing that it will abandon its quantum satellite technology after a review revealed that security for its end-point encryption keys is equally strong when terrestrially based as when satellite based. The company has a buyer for its in-process satellite but will build no more and it is seeking a buyer for its intellectual property. Arqit also filed a shelf registration for $100 million in new stock issuances.
Weber posted a wider-than-expected loss per share and lower-than-expected revenue for its fourth quarter. Shares dropped by less than 1%. The company continues to estimate going private in the first half of next year.
24/7 Wall St.After markets close Wednesday or before they open on Thursday, Jabil, Lennar, Planet Labs and Trip.com are on deck to report quarterly results. (Note: Jabil was included in the report by mistake. The company reports after markets close Thursday.)
Here is a preview of three companies set to report results late on Thursday or early Friday.
Accenture
Management and technology consulting giant Accenture PLC (NYSE: ACN) has suffered a share price decline of nearly 22% over the past 12 months. From a peak in late December of last year, the stock has shed more than 41%. The Dublin, Ireland-based company reports quarterly results first thing Friday morning.
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Accenture’s problem is that companies worried about inflation and a looming recession are spending less on technology upgrades and services. That will not be the case forever, though, and the company’s compound annual growth rate of around 8% over the past decade is likely to return.
Of 24 brokerages covering the stock, 15 have a Buy or Strong Buy rating and eight more rate the shares at Hold. At a recent trading price of about $295.35 a share, the upside potential based on a median price target of $310.00 is 5%. At the high target of $360.00, the potential upside is about 8.3%.
Analysts are expecting fiscal first-quarter revenue of $15.59 billion, which would be up 1.1% sequentially and by 6.5% year over year. Adjusted earnings per share (EPS) for the quarter are forecast at $2.93, up 12.5% sequentially and 5.4% higher year over year. For the full 2023 fiscal year ending in August, analysts currently estimate EPS of $11.36, up 5%, on revenue of $64.18 billion, up 4.2%.
Accenture shares trade at 26.0 times expected 2023 EPS, 23.6 times estimated 2024 earnings of $12.54 and 21.4 times estimated 2025 earnings of $13.79 per share. The stock’s 52-week trading range is $242.95 to $417.37. The company pays an annual dividend of $4.45 (yield of 1.55%). Total shareholder return for the past 12 months was negative 20.7%.
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Adobe
Software maker Adobe Inc. (NASDAQ: ADBE) reports quarterly earnings after markets close on Thursday. The company’s 52-week high was posted exactly a year ago, and the 52-week low was recorded in late September. Since that low point, the shares have added about 23.4%.
Last week, Adobe confirmed a report that it is opening its Adobe Stock service to images generated using artificial intelligence programs. And on December 1, the company celebrated its 40th anniversary by submitting the source code for an early version of its PostScript language (the predecessor to PDF) to the Computer History Museum.
Of 32 analysts covering Adobe stock, 17 have a Buy or Strong Buy rating and the other 15 have Hold ratings. At a share price of around $342.50, the upside potential based on a median price target of $357.50 is about 4.4%. At the high target of $475.00, the upside potential is almost 39%.
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Fiscal fourth-quarter revenue is forecast at $4.26 billion, up 2.2% sequentially and by 9.0% year over year. Adjusted EPS are forecast at $3.50, up 3.1% sequentially and 9.4% higher year over year. For the full 2022 fiscal year that ended in November, analysts are forecasting EPS of $13.63, up 9.2%, on sales of $17.61 billion, up 11.6%.
Adobe stock trades at 25.1 times expected 2022 EPS, 22.3 times estimated 2023 earnings of $15.35 and 19.3 times estimated 2024 earnings of $17.70 per share. The stock’s 52-week range is $274.73 to $636.00. Adobe does not pay a dividend. Total shareholder return for the past year was negative 48%.
Darden Restaurants
Darden Restaurants Inc. (NYSE: DRI), the owner and operator of more than 1,800 restaurant locations, including Olive Garden and Longhorn Steakhouse, will report second-quarter fiscal 2023 results Friday morning. Over the past 12 months, Darden stock has declined by about 1.9%. The stock’s 52-week high was posted in early January, and shares did not approach that level again until about two weeks ago.
The company’s ability to raise prices to cope with rising costs has been strong but may weaken if demand for dining out declines. And analysts have lowered their EPS estimates for the year by about 8.3%, giving the restaurateurs an easier target.
Of 30 analysts covering Darden, 19 have a Buy or Strong Buy rating and the other 11 rate the stock at Hold. At a share price of around $145.00, the stock trades right at its median price target. At the high price target of $160.00, the upside potential is 10.3%.
Second-quarter revenue is forecast at $2.43 billion, down 0.7% sequentially but up 7.0% year over year. Adjusted EPS are forecast at $1.44, down 6.0% sequentially and by 2.7% year over year. For the full 2023 fiscal year that ends in May, current estimates call for EPS of $7.74, up 4.8%, on sales of $10.32 billion, up 7.2%.
Darden stock trades at 18.7 times expected 2023 EPS, 16.8 times estimated 2024 earnings of $8.64 and 15.1 times estimated 2025 earnings of $9.60 per share. The stock’s 52-week range is $110.96 to $155.25. Darden pays an annual dividend of $4.84 (yield of 3.35%). Total shareholder return for the past year was 1.7%.
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