Earnings Previews: AT&T, Boeing, Freeport-McMoRan, NextEra Energy

In mid-morning trading Monday, the Dow Jones industrials traded 0.971% higher, the S&P 500 was up 1.31% and the Nasdaq traded up 1.89%. All 11 market sectors traded in the green, with tech leading the way with a gain of around 2.5%.

Before U.S. markets opened on Monday, Synchrony Financial reported results that beat consensus estimates for earnings per share (EPS) and revenue. The bank’s provision for credit losses doubled year over year as charge-offs rose by 111 basis points to 3.48%. Shares were down 1.7% in mid-morning trading.

Baker Hughes missed both earnings and revenue estimates but issued in-line guidance for both the first quarter and the full 2023 fiscal year. Activity has picked up but remains below pre-pandemic levels. Crude oil producers are raising shareholder payouts, not drilling activity. That is why the shares were up 0.4% Monday.

Before markets open on Tuesday, D.R. Horton, General Electric, Halliburton, Lockheed Martin and Raytheon will report quarterly results. Three other companies are also on deck for earnings reports first thing Tuesday: Johnson & Johnson, 3M and Verizon. Also watch for upcoming reports from ASML, Microsoft and Texas Instruments.

First thing Wednesday morning, AT&T, Boeing, Freeport-McMoRan and NextEra Energy are scheduled to post their results.

AT&T

Shares of AT&T Inc. (NYSE: T) have declined by about 29% over the past 12 months. Rival Verizon is down by 25% over the same period, while T-Mobile is up by 39%. AT&T has been focused on building out its 5G network but still trails both Verizon and leader T-Mobile in subscriber growth and network speed.

The Federal Trade Commission said last week that AT&T still has $7 million remaining to distribute on its 2019 $60 million settlement related to the company’s failure to notify customers that it could throttle their download times in certain circumstances. The company was also hit with a $166 million penalty for patent infringement last week.

Sentiment on the stock has turned cautious. Of 29 brokerages surveyed, 13 have a Buy or Strong Buy rating, while 14 have Hold ratings. At a recent share price of around $19.20, the implied upside based on a median price target of $20.50 is 6.8%. At the high price target of $25.00, the upside potential is about 30%.

Fourth-quarter revenue is forecast at $31.34 billion, which would be up 4.3% sequentially but down 30.7% year over year. Adjusted EPS are forecast at $0.57, down 15.6% sequentially and by 26.9% year over year. For the full 2022 fiscal year, EPS are expected to come in at $2.60, down 23.4%, on sales of $125.23 billion, down about 25.8%.

AT&T stock trades at about 7.4 times expected 2022 EPS, 7.5 times estimated 2023 earnings of $2.56 and 7.4 times estimated 2024 earnings of $2.60. The stock’s 52-week trading range is $14.46 to $27.00. AT&T’s current annual dividend is $1.11 (yield of 5.77%). Total shareholder return for the past 12 months was 1.36%.

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