Shortly before noon Friday, the Dow Jones industrials traded 0.13% higher, the S&P 500 down 0.29% and the Nasdaq down 0.46%. Weak reports for Alphabet, Amazon, Apple and Ford got the day off to a sluggish start.
After U.S. markets closed on Thursday, Amazon missed the consensus earnings per share (EPS) estimate on revenue that was $3.5 billion higher than expected. The company is attempting to get back in its groove by cutting costs (read: firing people). Shares traded down 5% Friday.
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Alphabet missed both top-line and bottom-line estimates. Like Meta and Amazon, Alphabet is looking to become more efficient (i.e., firing people). It is worth noting that the company believes it is in the driver’s seat when it comes to artificial intelligence. It better hope so. Shares traded down 0.8% Friday morning.
Apple, like Alphabet, missed on both the top and bottom lines. The company expects iPhone sales to pick up in the current quarter. In the prior quarter, iPhone sales were down by $3 billion. Foreign exchange rates shaved eight points from revenue. Still, if Apple can sort out its supply issues, a one-quarter dip may be a buying opportunity. The stock traded up 3.15% at noon.
Qualcomm beat the consensus EPS estimate but missed on revenue and traded up about 0.6% Friday.
Ford missed the consensus EPS estimate but posted better-than-expected revenue. After telling investors that the company left $2 billion on the table last year, CFO John Lawler said Ford needs to “improve quality and lower costs.” To that end, Ford will be “very aggressive” in firing people. The stock traded down 6.7% Friday morning.
24/7 Wall St.Starbucks missed top-line and bottom-line estimates, largely due to plummeting sales in China, where government lockdowns kept people out of the company’s stores. Now that the lockdowns have ended, sales are picking up again but were still below year-ago levels for January. Shares traded down 3.6%.
U.S. Steel reported solid beats on both profit and revenue. The company posted the second-best annual financial performance in its 122-year history, trailing only 2021. Shares traded up 3.8% at noon Friday.
ON Semiconductor and Tyson Foods are due to report quarterly results first thing Monday morning. Later in the day, look for reports from NOV, Pinterest and Simon Property Group.
Here are previews of three firms set to report results early on Tuesday.
BP
Shares of integrated oil supermajor BP PLC (NYSE: BP) have performed well over the past year but trail far behind Chevron and Exxon, which are up 43% and 27%, respectively. BP’s 12-month increase was about 11.5%.
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While not the first fossil fuel company to declare itself a supporter of renewables, the company has spent significant cash to reach its stated goal of net-zero emissions from the products it sells. Now, The Wall Street Journal has reported, CEO Bernard Looney is walking back some of the company’s promises in an effort to raise returns for shareholders.
Of 23 brokerages covering the stock, 15 have a Buy or Strong Buy rating and the others rate it at Hold. At a recent price of around $35.60 per American depositary share (ADS), they trade above their price target of around $32.90. At the high price target of $40.38, the upside potential is about 14.3%. One ADS is equal to six common shares traded in London.
The consensus estimate for first-quarter revenue is $59.97 billion, which would be up 9.2% sequentially and 18.6% higher year over year. Adjusted EPS are forecast at $1.56, down 39.5% sequentially but up 23.8% year over year. For the 2022 fiscal year, analysts expect BP to report EPS of $8.64, up 126%, on sales of $225.15 billion, up 42.7%.
BP’s shares trade at about 4.1 times expected 2022 EPS, 5.6 times estimated 2023 earnings of $6.24 and 6.2 times estimated 2024 earnings of $5.70 per share. The stock’s 52-week trading range is $25.36 to $36.69. BP pays an annual dividend of $1.38 (yield of 3.8%). The total shareholder return for the past year was 14.7%.
Centene
Health care provider Centene Corp. (NYSE: CNC) provides services and programs to underinsured and uninsured people in the United States. It is the country’s sixth-largest health care plan operator and has a market cap of nearly $42 billion. Measured by net premiums, Centene and Elevance are tied for second in the world behind UnitedHealth Group. Centene’s Health Net subsidiary recently won a contract to manage the Medi-Cal (Medicaid) programs in Sacramento and Los Angeles counties.
Of 19 brokerages covering Centene stock, 15 have a Buy or Strong Buy rating and another three rate the shares at Hold. At a price of around $72.40 a share, the implied gain based on a median price target of $100.00 is 38.1%. At the high price target of $110.00, the upside potential is about 51.9%.
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The consensus estimate for fourth-quarter revenue is $35.37 billion, down 1.4% sequentially but 8.6% higher year over year. Adjusted EPS are forecast at $0.84, down 35.7% sequentially and by 16.8% year over year. For the 2022 fiscal year, analysts expect Centene to report EPS of $5.74, up 11.4%, on sales of $144.51 billion, up 14.7%.
Centene’s shares trade at 12.6 times expected 2022 EPS, 11.4 times estimated 2023 earnings of $6.37 and 9.9 times estimated 2024 earnings of $7.33 per share. The stock’s 52-week range is $71.94 to $98.53. Centene does not pay a dividend. The total shareholder return for the past year was negative 11.4%.
Linde
Since posting a 52-week low in September, Linde PLC (NYSE: LIN), the world’s largest industrial gas company, has added about 19.6% to its share price. Among the smorgasbord of chemicals the company produces, the most interesting may be green hydrogen. The U.K.-based company’s market cap is nearly $161 billion and its green hydrogen plant near Niagara Falls is expected to begin producing hydrogen in 2025.
No analyst has a Sell rating on the stock, and 22 of the 24 brokerages covering the stock have Buy or Strong Buy ratings. At a share price of around $326.60, the upside potential based on a median price target of $366.00 is 12.1%. At the high target of $402.00, the upside potential is 23.1%.
Linde is expected to report fourth-quarter revenue of $8.48 billion, down 3.6% sequentially but up 2.2% year over year. Adjusted EPS are forecast at $2.89, down 6.84% sequentially and 4.3% higher year over year. For the full year, analysts expect the company to report EPS of $12.02, up 12.5%, on sales of $33.98 billion, up 10.4%.
The stock trades at of 27.2 times expected 2022 EPS, 25.3 times estimated 2023 earnings of $12.92 and 22.8 times estimated 2024 earnings of $12.92 per share. The stock’s 52-week range is $262.47 to $347.30. Linde pays an annual dividend of $4.68 (yield of 1.41%), and total return to shareholders for the past year was 6.38%.
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