The new earnings season is “officially” underway now. Three notable companies reported quarterly earnings before U.S. markets opened on Thursday.
Commercial Metals missed the consensus estimate for earnings per share (EPS) by 4.5% but did beat on revenue. Compared to last year, revenue fell 8.2%, however. The outlook is not all that rosy either. Shares traded down about 7.4% shortly after Thursday’s opening bell.
Delta Air Lines beat consensus estimates for third-quarter EPS and revenue. Delta expects revenue and EPS for the fourth quarter and the full year to come in near the low end of its guidance. The stock traded up by around 0.4%
Walgreens beat the consensus revenue estimate by about 1.8% but missed the EPS estimate by $0.02 (2.9%). However, revenue grew by 9.2% year over year. The stock was up 0.9% in early trading.
BlackRock, Citigroup, JPMorgan, UnitedHealth and Wells Fargo all report quarterly results early Friday morning.
There is only one notable earnings report due on Monday morning.
Charles Schwab
Charles Schwab Corp. (NYSE: SCHW) has seen its share price fall by nearly 27% over the past 12 months. The stock has dropped more than 13% in the past month.
Like other financial industry players, Schwab is likely to report a sharp increase in unrealized losses on its fixed-income products due to interest rate risk. There is also deposit rate risk, resulting from more people putting their money in savings products like money market funds and certificates of deposit. That flight to safety may be waning, and a boost in net interest income is likely on its way. But when will it arrive?
Analyst Rating and Forecasts
Analysts remain bullish on the stock, with 16 of 20 having ratings of Buy or Strong Buy and two with Hold ratings. At a share price of around $51.60, the upside potential based on a median price target of $75.00 is 45.3%. At the high target of $95.00, the upside potential is 84.1%. The stock trades near its 52-week low, so the upside calculations may be a bit rich.
Third-quarter revenue is forecast at $4.64 billion, which would be down 0.2% sequentially and 15.6% lower year over year. Adjusted EPS are forecast to be flat sequentially at $0.75 and down 31.8% lower year over year. The current estimates for the 2023 fiscal year call for revenue of $19.21 billion, down 7.5%, and EPS of $3.20, down 18%.
Dividends and Total Return
Schwab trades at 16.1 times expected 2023 EPS, 12.7 times estimated 2024 earnings of $4.05 and 10.1 times estimated 2025 earnings of $5.11 per share. The 52-week trading range is $45.00 to $86.63. Schwab pays an annual dividend of $1.00 (yield of 1.93%). Total shareholder return for the past year is negative 27.20%.
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