Shortly after Monday’s opening bell, the Dow Jones industrials traded 0.50% lower, the S&P 500 was down 0.61%, and the Nasdaq traded down 0.58%. Friday’s lower close set the tone in premarket trading and regular session trading was firmly lower in the first half-hour.
Before U.S. markets opened on Monday, Tyson Foods reported fiscal first-quarter results that missed both earnings per share (EPS) and revenue estimates. Beef prices dropped 8.5% last year, and chicken prices are expected to continue falling as well. The company reaffirmed previous guidance, but shares traded down about 5.1% early Monday.
ON Semiconductor beat analysts’ consensus estimates on both the top and bottom lines. The less-good news is that the chipmaker issued downside EPS and revenue guidance for the current quarter. An announced $3 billion share buyback program (over nearly three years) might have helped moderate the loss. Shares traded down 0.4% shortly after U.S. markets opened.
After markets close Monday, NOV, Pinterest and Simon Property Group are on deck to report quarterly results. BP, Centene and Linde are expected to report quarterly results the following morning.
Here is what to expect when the following three firms report their results later on Tuesday.
Enphase Energy
Solar energy component maker Enphase Energy Inc. (NASDAQ: ENPH) has seen its share price jump by more than two-thirds over the past year. Shares have dropped nearly 16% this year, however, and are down nearly 25% over the past three months.
Enphase is the worst-performing stock among the Nasdaq 100, weighed down by concerns over consumer demand for new solar panels. Those concerns were exacerbated by California’s proposed cut to how much utility companies have to pay for electricity returned to the grid from residential solar customers. The proposal slashes the payments by an estimated 75%, from 30 cents per kilowatt-hour to 8 cents.
Brokerages remain bullish on the stock, with 19 of 30 analysts having a Buy or Strong Buy rating and 10 others rating it at Hold. At a recent share price of around $223.00, the implied gain based on a median price target of $300.00 is about 34.5%. At the high target of $365.00, the upside potential is 63.7%.
For the fourth quarter, analysts have forecast revenue of $703.16 million, which would be up 10.8% sequentially and by 70.4% year over year. Adjusted EPS are forecast at $1.26, up 0.6% sequentially and 72.6% higher year over year. For the 2022 fiscal year, analysts estimate EPS at $4.34, up 80.2%, on revenue of $2.3 billion, up 66.7%.
Enphase’s shares trade at 51.3 times expected 2022 EPS, 41.8 times estimated 2023 earnings of $5.34 and 32.6 times estimated 2024 earnings of $6.84 per share. The stock’s 52-week trading range is $118.57 to $339.92. Enphase does not pay a dividend. Total shareholder return for the past year was 67.7%.
Fortinet
Cybersecurity provider Fortinet Inc. (NASDAQ: FTNT) has seen its share price drop by nearly 35% since posting a 52-week high in mid-April. Since early August, the stock has traded in a narrow range between $46 and $57. The stock closed at $53.00 on Friday. The company’s big problem is Microsoft, the heavyweight champion of the cybersecurity space. Fortinet’s hardware data traffic monitoring systems give it a well-known and used differentiator. Expanding its product offerings into the cloud security space is expected to boost both revenue and profits going forward.
Of 35 analysts covering the company, 24 have a Buy or Strong Buy rating and 11 others rate the stock a Hold. At a share price of around $53.00, the implied gain based on a median price target of $64.00 is about 20.8%. At the high target of $85.00, the upside potential is 60.4%.
For the fourth quarter, analysts have forecast revenue of $1.3 billion, up 12.7% sequentially and by almost 35% year over year. Adjusted EPS are forecast at $0.39, up 19.1% sequentially and 56.0% higher year over year. For the 2022 fiscal year, analysts estimate EPS at $1.15, up 44.2%, on revenue of $4.43 billion, up 32.5%.
Fortinet’s shares trade at 46.1 times expected 2022 EPS, 38.1 times estimated 2023 earnings of $1.39 and 31.3 times estimated 2024 earnings of $1.69 per share. The stock’s 52-week range is $42.61 to $71.52. The company does not pay a dividend, and total shareholder return for the past year was negative 10.77%.
Lumen
Telecom services provider Lumen Technologies Inc. (NYSE: LUMN) has seen its share price plunge 58.3% over the past 12 months. No surprise, really, since its dividend yield was about 8%, until it wasn’t. The company eliminated its dividend last November and said that it would instead begin share buybacks.
Lumen announced a $1.5 billion buyback program when it released third-quarter results in November. The company’s operating cash flow for the past 12 months is $5.5 billion and free cash flow is almost $2.5 billion. The company probably will not boost its buyback program yet, but it could easily do so. It is worth noting that the company raised $10.2 billion following the sales of its Latin American and local exchange carrier businesses.
Analysts are relatively cool to the stock. Of 13 brokerages covering Lumen, four have a Sell or Strong Sell rating and another 7 rate the shares a Hold. At a price of around $5.25 a share, the upside potential based on a median price target of $6.00 is 14.3%. At the high target of $14.00, the upside potential on the stock is about 167%.
Fourth-quarter revenue is expected to drop sequentially by 13.7% and year over year by 21.9% to $3.79 million. EPS are forecast at $0.23, up 62.2% sequentially but down 51.9% year over year. For the full year, EPS is forecast to dip by 30% to $1.34 and revenue is expected to fall by 11.3% to $17.47 billion.
Lumen stock trades at 3.9 times expected 2022 EPS, 7.6 times estimated 2023 earnings of $0.69 and 7.8 times estimated 2024 earnings of $0.68 per share. The stock’s 52-week range is $4.96 to $12.87. Lumen does not pay a dividend and the total return for the past year was negative 55.35%.
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