Before U.S. markets opened on Tuesday, Bank of America beat consensus estimates on both the top and bottom lines. Profit rose by 20% year over year, and revenue was up more than 11%. Shares were up about 4.2% shortly in mid-morning trading Tuesday.
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Morgan Stanley also beat consensus estimates for quarterly revenue and earnings per share (EPS). Profits were lower year over year, but revenue rose by 2.3%. Shares traded up 6.6%.

Bank of New York Mellon also topped revenue and EPS estimates. Revenue reached a record high, but investors did not approve of the decline in net interest margin. Shares traded up 2.3% in Tuesday’s regular session.

Charles Schwab touted its $180 billion in new assets and 1 million new accounts during the quarter, but revenue was down 8.6% year over year even though it beat expectations. EPS was also above estimates. The stock traded up 12.3%.

Lockheed Martin also beat top-line and bottom-line estimates. The country’s largest defense contract raised fiscal year EPS and revenue guidance. Shares traded down 0.2%.

There are no notable earnings reports due after markets close on Tuesday. Early Wednesday, ASML, Baker Hughes, Goldman Sachs, Halliburton and U.S. Bancorp will report quarterly results. Look for IBM, Kinder Morgan, Netflix and Tesla to post their results later that day.

These three companies are on deck to report quarterly results before first thing Thursday morning.

American Airlines

Over the past 12 months, American Airlines Group Inc. (NASDAQ: AAL) has seen its share price increase by more than 25%. For the year to date, the stock is up almost 43%, including a drop of around 2% since rival Delta Air Lines reported second-quarter results last week.

That decline is still less than the drop of 3.4% in Delta’s stock, the 5.3% drop in United Airlines’ stock, or the 5.6% dip in Southwest Airlines’ stock since Delta’s reported a massive beat on earnings. United, which reports results late Wednesday, could turn sentiment around ahead of American’s report, but analysts do not appear to be expecting that. Worries about the global economy and continuing travel demand given higher ticket costs.

Analysts remain cautious on the stock. Of 21 brokerages covering it, 15 have a Hold rating and just four have Buy or Strong Buy ratings. At a recent share price of around $18.00, the implied upside based on a median price target of $19.00 is 5.6%. At the high target of $29.00, the upside potential is 61.1%.
Second-quarter revenue is forecast at $13.73 billion, which would be up 12.7% sequentially and 2.3% higher year over year. American Airlines is expected to post adjusted EPS of $1.59, up sequentially from $0.05, and more than double the year-ago EPS of $0.76 per share. For the full 2023 fiscal year, the company is expected to post EPS of $2.96, up nearly 500%, on revenue of $52.81 billion, up 7.8%.

American stock trades at 6.2 times expected 2023 earnings, 5.4 times estimated 2024 earnings of $3.41 and 3.7 times estimated 2025 earnings of $4.92 per share. Its 52-week trading range is $11.65 to $21.42. American does not pay a dividend. The company’s total return for the past 12 months was 27.16%.
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Freeport-McMoRan

Over the past 12 months, shares of copper and gold miner Freeport-McMoRan Inc. (NYSE: FCX) have soared by more than 56%. For the year to date, however, shares have added only 6.2%.

Gold prices are up about 15% for the past 12 months. Including a year-to-date gain of 8%, the yellow metal is trading close to its all-time high. Copper, Freeport’s key revenue producer, trades up about 15.5% for the past 12 months but is essentially flat since the beginning of the year. The company managed to reduce expenses in the first quarter but still failed to increase net income. Freeport burned almost $1.3 billion in cash in the first quarter, and free cash flow was negative $71 million.

Of 21 analysts covering the stock, 10 have a Buy or Strong Buy rating, and 10 rate it at Hold. At a share price of around $41.00, the implied upside to a median price target of $46.35 is about 13%. At the high price target of $57.00, the upside potential reaches 39%.

Second-quarter revenue is forecast at $5.66 billion, up 5.1% sequentially and by 4.4% year over year. Adjusted EPS are forecast at $0.38, down 27.8% sequentially and by 34.5% year over year. For the full 2023 fiscal year, analysts are expecting EPS of $1.79, down 26.6%, on sales of $22.99 billion, up 0.9%.

Freeport stock trades at 22.8 times expected 2023 EPS, 19.0 times estimated 2024 earnings of $2.15 and 15.2 times estimated 2025 earnings of $2.69. The 52-week range is $26.03 to $46.73. The company pays an annual dividend of $0.60 (yield of 1.46%). Total shareholder return for the past 12 months was 60.74%.

Newmont

Newmont Corp. (NYSE: NEM) has seen its share price fall by about 17.5% over the same 12 months that gold prices rose 15%. Newmont’s finally successful chase to pay around $19 billion for Australian gold miner Newcrest no doubt plays a part in the share price decline.

For mining companies wanting to stay in business, however, acquisitions are generally cheaper than new exploration. If a miner wants growth, it has to come by acquisition. And, provided that borrowing a truckload or two of cash is not too expensive, the limits on acquisition prices are an upwardly moving target.
Analysts are slightly cautious on Newmont stock, with eight of 22 brokerages giving the shares a Hold rating while 12 others have Buy or Strong Buy ratings. At a share price of around $45.00, the upside potential based on a median price target of $56.00 is 24.4%. At the high price target of $64.00, the upside potential is 42.2%.
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Second-quarter revenue is forecast at $2.89 billion, up 7.9% sequentially but down 5.6% year over year. Adjusted EPS are forecast at $0.50, up 20.1% sequentially and 8.7% higher year over year. For the full 2023 fiscal year, estimates call for EPS of $2.38, up 28.5%, on sales of $12.43 billion, up 4.4%.

Newmont stock trades at 19.0 times expected 2023 earnings, 16.8 times estimated 2024 earnings of $2.70 and 18.0 times estimated 2025 earnings of $2.52 per share. The 52-week trading range is $37.45 to $60.08. Newmont pays an annual dividend of $1.60 (yield of 3.56%). Total shareholder return for the past year was negative 13.54%.

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Taiwan Semiconductor

Demand for computer chips has been declining for most of 2023, and the decline is weighing on prospects for chipmakers like Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM), better known as TSMC.

The contract chip manufacturer posted a sequential revenue drop of 20% in the first quarter, and while EPS beat estimates, the sequential decline was nearly 30%. Some analysts see revenue growth slowing by 10% to 15% per quarter until next year. It is questionable whether even a soft landing for the global economy or more craziness in AI will lift demand for more semiconductors.

Of 30 analysts covering the stock, 27 have Buy or Strong Buy ratings. At a price of around $103.00 per American depositary receipt (ADR), the upside potential based on a median price target of $108.00 is 4.9%. At the high price target of around $132.00, the upside potential is about 28.1%. Each ADR is equal to five ordinary shares traded in Taiwan.

For TSMC’s second quarter, analysts are looking for revenue of $15.45 billion, down 7.2% sequentially and 14.0% lower year over year. Adjusted earnings per ADR are expected to come in at $0.22, down 17.7% sequentially and by 29.0% year over year. For the full 2023 fiscal year, earnings per ADR are forecast at $1.00, down 21.7%, on revenue of $69.18 billion, down 6.1%.

TSMC ADRs trade at 18.6 times expected 2023 EPS, 15.1 times estimated 2024 earnings of $1.23 and 12.6 times estimated 2025 earnings of $1.48 per share. The 52-week range is $59.43 to $110.69, and the company pays an annual dividend of $1.78 (yield of 1.69%). Total shareholder return for the past 12 months was 24.72%.

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