In the first half-hour of trading Friday, the Dow Jones industrials and the S&P 500 were both flat and the Nasdaq was 0.11% lower.

After U.S. markets closed Thursday afternoon, railroad operator CSX reported quarterly results that beat estimates on both the top and bottom lines. Shares traded up 2.4% early Friday.
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Before markets opened on Friday, Procter & Gamble beat the consensus earnings per share (EPS) and revenue estimates. The consumer goods giant also affirmed previous fiscal 2023 EPS guidance and raised revenue guidance. Shares traded up by 4.2%.

Regions Financial missed both Wall Street revenue and profit estimates, but considering the bank’s near-death experience, that is not so bad. The stock traded down about 4.4% Friday morning.

Schlumberger also beat both top-line and bottom-line estimates, but not by enough to impress investors. Shares traded down 1.9%.

Freeport-McMoRan beat consensus estimates for both EPS and revenue, but the bar was set too low to give shares a lift. Lower copper prices and a 50% drop in production contributed to the mediocre results. Shares traded down by 4.3%.

Cleveland-Cliffs, Coca-Cola, First Republic Bank and Range Resources are on deck to report quarterly results on Monday.

Here are previews of four companies set to report results first thing Tuesday morning.

McDonald’s

Shares of McDonald’s Corp. (NYSE: MCD) have added almost 14% to their price over the past 12 months, though growth for the first quarter of 2023 so far is just 4.3%.

Two weeks ago, the fast-food chain laid off hundreds of corporate employees and reduced the compensation of others. That does not hurt the share price, of course. What might is a continuing dispute with the company’s franchisees over corporate standards and rules that Mickey D’s insists on but that franchisees balk at because they have little to no input into the process nor any recourse from its effects.

Of 36 brokerages covering the Dow stock, 27 have a Buy or Strong Buy rating, while another eight rate McDonald’s at Hold. At a recent share price of around $291.00, the upside potential based on a median price target of $300.00 is 3.1%. At the high price target of $330.00, the upside potential is about 13.4%.

First-quarter revenue is forecast at $5.58 billion, which would be down 5.8% sequentially and down about 1.6% year over year. Adjusted EPS are pegged at $2.33, down 9.9% sequentially but up 2.2% year over year. For the full 2023 fiscal year, consensus estimates call for EPS of $10.64, up 5.4%, on revenue of $24.43 billion, also up 5.4%.
McDonald’s stock trades at 27.3 times expected 2023 EPS, 24.8 times estimated 2023 earnings of $11.75 and 22.7 times estimated 2025 earnings of $12.80 per share. The stock’s 52-week trading range is $228.34 to $291.67, and the high was posted Thursday. McDonald’s pays an annual dividend of $6.08 (yield of 2.09%). Total shareholder return over the past 12 months is 16.31%.
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PepsiCo

Snack food and soft-drink maker PepsiCo Inc. (NYSE: PEP) has added 5.6% to its share price over the past 12 months, including a gain of 9.1% in the past three months. On Thursday, the company announced that it plans to put more than 700 electric delivery vehicles into service this year in its Frito-Lay division, a move PepsiCo said was the equivalent of removing 1,533 passenger cars from the nation’s roads. The EVs will be made by Ford, BYD, Tesla and others, according to the company.

Of 23 brokerages covering the stock, 11 have a Buy or Strong Buy and another 11 have Hold ratings. At a share price of around $185.30, the upside potential based on a median price target of $189.00 is 2%. At the high price target of $205.00, the upside potential is 40.6%.

First-quarter revenue is forecast at $17.28 billion, down 38.3% sequentially but 6.7% higher year over year. Adjusted EPS are forecast to dip sequentially by 17.1% to $1.39 but rise by 7.7% year over year. For the full 2023 fiscal year, analysts expect PepsiCo to post revenue of $89.79 billion, up 3.9%, and EPS of $7.26, up 6.9%.

PepsiCo stock trades at 25.5 times expected 2023 EPS, 23.4 times estimated 2024 earnings of $7.91 and 21.8 times estimated 2025 earnings of $8.50 per share. The stock’s 52-week range is $154.86 to $186.84. PepsiCo pays an annual dividend of $4.60 (yield of 2.49%). Total shareholder return for the past year was 8.46%.

3M

Over the past 12 months, shares of Dow component 3M Co. (NYSE: MMM) have tumbled by just over 30%. 3M was among our Dogs of the Dow for 2023, one of 10 Dow stocks paying the highest dividend, largely as a result of a falling share price. The stock price has dropped about 12.7% in 2023 and was down 14% at the end of March to give 3M the dubious honor of being the worst performer among the Dow stocks.

The company is defending itself in two major legal issues: 3M is a producer of polyfluoroalkyl substances, known as PFAS, that are “forever” pollutants that are likely to come under stricter federal regulations. The other concerns defective combat earplugs. 2023 is not shaping up as a good year for 3M.

Analyst sentiment reflects the company’s woes. Of 19 brokerages covering the stock, 12 have a Hold rating. There are two Strong Buy ratings and five Sell or Strong Sell ratings. At a per-share price of around $104.70, the implied gain based on a median price target of $112.50 is 7.4%. At the high target of $181.00, the upside potential is 72.9%.
The consensus revenue estimate for the first quarter is $7.51 billion, down 7% sequentially and by 14.9% year over year. Adjusted EPS are forecast at $1.60, a sequential decline of 30% and a year-over-year decline of 39.6%. For the full 2023 fiscal year, analysts are looking for EPS to tumble by 14.8% to $8.61 on a revenue decline of 6.8% to $31.91 billion.
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3M stock trades at 12.2 times expected 2023 EPS, 11.1 times estimated 2024 earnings of $9.44 and 10.5 times estimated 2025 earnings of $10.00 per share. The stock’s 52-week trading range is $100.16 to $154.66, and 3M pays an annual dividend of $6.00 (yield of 5.66%). Total shareholder return for the past 12 months was negative 27.25%.

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Verizon

The third Dow stock reporting results Tuesday morning is telecom giant Verizon Communications Inc. (NYSE: VZ). Over the past 12 months, the stock has dropped by 31.7%, including a year-to-date decline of 5.6%. Shares fell by 3.7% on Thursday, the largest drop among the Dow stocks, following the weak report on subscriber growth from AT&T.

Verizon stock has performed far worse in the past year than either of its rivals, and both AT&T and Verizon continue losing subscribers to T-Mobile. Analysts have modest expectations for the company’s first quarter, so a miss on EPS or revenue could really hammer the shares.

Analysts remain wary. Of 28 analysts, only eight have Buy or Strong Buy ratings, while 19 have Hold ratings. At a share price of around $37.20, the implied gain based on a median price target of $44.00 is 18.3%. At the high price target of $64.00, the potential upside is 72%.

First-quarter revenue is forecast to come in at $33.64 billion, down 4.6% sequentially but 0.3% higher year over year. Adjusted EPS are forecast at $1.19, up 0.3% sequentially and down 11.9% year over year. For the full 2023 fiscal year, analysts expect Verizon to post EPS of $4.69, down 9.6%, on sales of $137.3 billion, up 0.3%.

Verizon stock trades at 7.9 times expected 2023 EPS, 7.8 times estimated 2024 earnings of $4.75 and 7.7 times estimated 2025 earnings of $4.83 per share. The stock’s 52-week range is $34.55 to $55.51. Verizon pays an annual dividend of $2.61 (yield of 7.02%). Total shareholder return over the past 12 months was negative 27.34%. Verizon was the top dog among 2023’s Dogs of the Dow.

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