The three major U.S. equity indexes closed higher last Friday. The Dow Jones industrials closed up 0.33%, the S&P 500 up 0.4% and the Nasdaq up 0.71%. U.S. markets were closed Monday.
On Monday, Taiwan-based United Microelectronics reported quarterly and year-end results that missed the earnings per share (EPS) estimate slightly and beat the revenue estimate. Shares traded flat in Tuesday’s premarket.
Before the bell on Tuesday, Goldman Sachs reported misses on both EPS and revenue. Investment banking fees were down 48% year over year, and the bank’s provision for loan losses jumped from $344 million a year ago to $972 million. Shares traded down about 2.6%.
Morgan Stanley also missed the consensus EPS estimate but did top the revenue estimate. Investment banking fees were off 49% year over year, and equity net revenue fell 24% compared with the fourth quarter of last year. Shares traded up 1.9%.
Silvergate Capital missed on profits, reporting a loss of $1 billion, compared to a net profit of $18.4 million in the year-ago quarter. Shares traded up 4% in Tuesday’s premarket, likely due to the fact that the bank did not fare much worse.
Here are our previews for two firms set to report results before markets open on Wednesday.
Charles Schwab
Charles Schwab Corp. (NYSE: SCHW) has seen its share price fall by about 11% over the past 12 months. Over the past six months, however, shares have added nearly 35%. The investment firm is currently sending out SEC-mandated checks totaling $187 million to clients who were misled by the company’s Intelligent Portfolios robo-advisor. Schwab’s overall investment portfolio is skewed toward Treasuries and other low-risk investments. Analysts expect that to be a plus in the current economic environment.
Analysts remain bullish on the stock, with 13 of 20 rating the shares at Buy or Strong Buy and the rest having Hold ratings. At a recent share price of around $83.00, the upside potential based on a median price target of $97.50 is 17.5%. At the high target of $122.00, the upside potential reaches 47%.
Fourth-quarter revenue is forecast at $5.56 billion, which would be up about 1% sequentially and by around 18% year over year. Adjusted EPS are forecast to dip by 0.7% to $1.09 sequentially and increase by 26.7% year over year. The current estimates for the 2022 fiscal year call for revenue of $20.89 billion, up 12.8%, and EPS of $3.94, up 21.1%.
Schwab trades at 21.1 times expected 2022 EPS, 17.2 times estimated 2023 earnings of $4.84 and 14.6 times estimated 2024 earnings of $5.69 per share. The stock’s 52-week trading range is $59.35 to $96.24. Schwab pays an annual dividend of $0.88 (yield of 1.05%). Total shareholder return for the past year is negative 10.1%.
Prologis
The country’s largest logistics real estate investment trust, Prologis Inc. (NYSE: PLD), has dropped 20.4% from its share price over the past 12 months, including a gain of about 29% so far in 2021. From a three-year low in March 2020 (the beginning of the COVID-19 pandemic), the stock price has doubled. At its three-year high in April of last year, shares were up almost 190%. Pandemic-induced inventory shortages drove demand for logistics space, and if that trend continues, Prologis is a good bet to benefit.
Analysts are bullish on the company, with 19 of 22 having a Buy or Strong Buy rating. The other three rate the stock at Hold. At a trading price of around $121.90, the implied upside based on a median target price of $130.00 is 6.6%. At the high price target of $193.00, the implied upside is about 58.3%.
Fourth-quarter revenue is forecast at $1.46 billion, up 26.3% sequentially and 36.4% higher year over year. Adjusted EPS re forecast at $0.54, down 60.3% sequentially and 67.7% lower year over year. The current estimates for the 2022 fiscal year call for revenue of $4.76 billion, up 14.7%, and EPS of $4.14, up 5.1%.
Prologis stock trades at around 29.4 times expected 2022 EPS, 43.0 times estimated 2023 earnings of $2.84 and 45.0 times estimated 2024 earnings of $2.71 per share. The stock’s 52-week range is $98.03 to $174.54. The company pays an annual dividend of $3.16 (yield of 2.59%). Its total shareholder return for the past year was negative 18.4%.
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