Earnings Previews: Caterpillar, Peabody Energy, Southwest Airlines

Markets

Before markets opened on Tuesday, United Parcel Service beat analysts’ profit and revenue estimates for the March quarter. UPS also reaffirmed revenue guidance of $102 billion for the 2022 fiscal year, slightly above analysts’ consensus. Shares traded down about 3.7% in the late morning Tuesday.

ADM beat estimates on both the top and bottom lines Tuesday morning, and the stock was up by about 3.2% just before noon. Corning also beat on the top and bottom lines and raised revenue guidance for the full fiscal year. The stock traded up by more than 4.2%. Homebuilder D.R. Horton beat estimates as well and issued guidance in line with expectations, and the stock has added 1.8% Tuesday morning.

GE continued Tuesday morning’s streak of companies beating estimates, but CEO Larry Culp said that GE currently expects to match the low end of its previous guidance. The stock traded down nearly 12%. PepsiCo also beat both revenue and profit estimates but issued profit guidance below analysts’ estimates, even though revenue guidance was higher than analysts are forecasting. The stock traded up about 0.3%. Raytheon beat the earnings per share (EPS) estimate but missed on revenue. Fiscal year guidance was mixed, and shares were up by less than 1% at noon Tuesday.

After markets close Tuesday, Enphase Energy, GM, QuantumScape and Texas Instruments are on deck to report March-quarter results. To round out the action, Alphabet, Chipotle, Microsoft and Visa also release will their earnings reports after the closing bell.

Before markets open on Wednesday, reports from Boeing, General Dynamics and Teck Resources are expected, along with those from Kraft Heinz, Spotify and T-Mobile. After markets close Wednesday, watch for reports from Ford, Meta Platforms, PayPal and Qualcomm.

Three more notable companies we have covered are Altria, Las Vegas Sands and Sirius XM.

Here is what analysts are expecting from three companies reporting quarterly results before markets open Thursday.

Caterpillar

After setting a new 52-week high in June, shares of heavy equipment maker Caterpillar Inc. (NYSE: CAT) have dropped about 10% from their shares. For the past 12 months, they are down about 4.6%. The better news for the Dow Jones industrial stock is that the stock price is up more than 18% since March 1. Rising commodity prices (food, metals, energy) mean more investment in developing new resources, and that is good for Caterpillar’s business. What is not so good are steel prices, which are among the drivers of higher costs to build the company’s machines.

Of 30 brokerages covering the shares, 12 have a Hold rating and 15 have a Buy or Strong Buy rating. At a recent price of around $214.60 a share, the upside potential based on a median price target of $245 is 14.2%. At the high target of $347, the upside potential is 61.7%.

Caterpillar is expected to report first-quarter revenue of $13.49 billion, which would be down 3.4% sequentially but up about 13.5% year over year. Adjusted EPS are forecast at $2.60, down 15% sequentially and 9.4% lower year over year. For the full 2022 fiscal year, analysts are expecting EPS of $14.55, up 12.9%, on revenue of $57.17 billion, up 12.2%.

Caterpillar stock trades at 17.6 times expected 2022 EPS, 14.7 times estimated 2023 earnings of $14.55 and 13.4 times estimated 2024 earnings of $15.99. The stock’s 52-week range is $179.67 to $246.69. Caterpillar pays an annual dividend of $4.44 (yield of 2.05%). Total shareholder return for the past 12 months was negative 5.1%.

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