William Potter
As market participants prepare for another busy week on the stock market, a variety of companies across multiple sectors are set to report their quarterly earnings. Big names like Tesla (NASDAQ: Tesla) and the alphabet (NASDAQ:GOG) (NASDAQ:GoogleHeadlines are expected to dominate this week as the week will feature big names from the technology, automotive, energy, healthcare and consumer goods industries.
Next week is also full of earnings from tech and telecom giants like IBM (NYSE: IBM), AT&T (T), Verizon (New York:VZ), Comcast (NASDAQ:CMCSA), service now (New York Stock Exchange: Now), Texas Instruments (NASDAQ:TXN) and NXP Semiconductors NV (NXPI). Additionally, Spotify Technology SA (SPOT) will shine a light on the music streaming industry.
General Motors and Ford will represent the automotive industry. In the energy sector, Nextera Energy, TotalEnergies and Enphase Energy will be closely watched for developments in renewable energy, while Valro Energy Corporation will provide insight into the refining industry.
Healthcare and pharmaceutical companies are also well represented, with AbbVie Inc. (ABBV), Bristol-Myers Squibb Company (BMY), and AstraZeneca PLC (AZN) highlighting drug development and healthcare trends.
Other noteworthy reports include Thermo Fisher Scientific Inc. (TMO), Philip Morris International (PM), Colgate-Palmolive Company (CL), Visa (V), 3M Company (MMM), Lockheed Martin Company (LMT), RTX Company (RTX), Dow (DOW), Cleveland-Cliffs Inc. (CLF), Coca-Cola Company (KO), Chipotle Mexican Grill (CMG), American Airlines Group (AAL), Southwest Airlines (LUV), United Parcel Service (UPS), and Waste Management (WM).
Here’s a summary of the key quarterly updates expected for the week of July 22-26:
Monday, July 22
Cleveland-Cliffs (CLF)
Cleveland-Cliffs (CLF) is scheduled to report second-quarter earnings results on Monday after the market close. Analysts expect earnings per share and revenue to decline year-over-year.
Seeking Alpha upgraded its stock rating from “sell” to “hold” in early July, in line with the consensus recommendation of Wall Street analysts.
Michael Del Monte, author of Seeking Alpha, believes CLF stock remains undervalued, with potential for long-term growth. Although the industry faces a cyclical downturn, he doesn’t expect to generate much enthusiasm from shareholders in the near term.
- Consensus EPS Estimate: $0.00
- Consensus Revenue Estimate: $5.19 Billion
- Earnings Overview: The company has beaten earnings per share expectations in 3 of the past 8 quarters, and has beaten revenue in 50% of those reports.
He also reported: Verizon Communications (VZ), AGNC Investment (AGNC), Nucor (NUE), SAP SE (SAP) and more.
Tuesday, July 23
Tesla (TSLA)
Elon Musk’s electric car giant Tesla (TSLA) is set to report its financial results on Tuesday after the market closes, with analysts expecting a significant drop in earnings per share on a year-over-year basis due to the effects of pricing and the trade war with China.
Tesla delivered 443,956 electric vehicles in the second quarter, slightly more than the 439,302 analysts had expected and a significant increase from the 386,810 deliveries in the previous quarter. However, the figure was down about 5% from the 466,140 deliveries a year earlier.
Tesla, which once boasted a market cap of more than $1 trillion, remains the underperformer among the tech and growth companies on the Magnificent 7 list. Tesla’s stock is down 3% so far in 2024, but that modest decline comes on the back of a more than 60% surge in the past three months that has lifted its market cap to $800 billion from less than $500 billion in the first quarter.
Tesla recently postponed its robotaxi unveiling event to October from the original August 8 date.
Both Seeking Alpha’s Quant Rating System and sell-side analysts are taking a cautious stance on the stock, assigning Hold ratings.
Earlier this week, Barclays reiterated its rating on Tesla ahead of its second-quarter earnings report, raising its price target to $225 from $180. Analyst Dan Levy believes Tesla has clear progress in the global shift to electric vehicles and the emergence of software-defined vehicles. However, the firm believes that near-term headwinds are being ignored amid the stock’s recent rally, keeping the company on the sidelines.
A shareholder at South African research firm Rasoli argues that Tesla shares are overvalued due to speculative growth and extreme multiples, creating challenges such as increased competition and declining margins. High capital intensity also constrains cash flows and limits shareholders’ return on capital. Tesla’s technological advantage is also diminished by disappointing self-driving capabilities and potential liability issues.
- Consensus EPS Estimate: $0.62
- Consensus Revenue Estimate: $24.70 Billion
- Earnings Overview: Tesla has beaten earnings per share estimates in four of the past eight quarters, and has only beaten revenue twice during that period.
Alphabet (GOOG) (GOOGL)
Alphabet (GOOG, GOOGL) is scheduled to report second-quarter results after the market closes on Tuesday. Analysts are expecting a strong quarter, with a 27% increase in earnings and a 12% rise in revenue. Over the past year, Alphabet’s stock price has risen more than 45%, far outperforming the S&P 500’s return of about 22%.
Last month, Seeking Alpha downgraded its rating on Alphabet shares from “strong buy” to “hold,” though Wall Street analysts maintain a bullish outlook with a unanimous “buy” rating.
Der Sansizbayev, author of Seeking Alpha, advises caution, citing valuation concerns due to recent highs. He highlights that valuation analysis suggests Alphabet’s fair value is $1.7 trillion, 27% below its current market cap. Additionally, Google’s heavy reliance on search presents a secular challenge as generative AI disrupts the industry. The company is lagging behind OpenAI’s ChatGPT, and competition is expected to intensify.
- Consensus EPS Estimate: $1.84
- Consensus Revenue Estimate: $84.29 Billion
- Earnings Overview: Google has beaten earnings per share and revenue expectations in 5 of the past 8 quarters.
He also reported: General Electric (GE), Visa (V), Coca-Cola (KO), General Motors (GM), Lockheed Martin (LMT), Freeport-McMoRan (FCX), Philip Morris International (PM), United Parcel Service (UPS), Texas Instruments (TXN), Comcast (CMCSA), Spotify Technology S.A. (SPOT), Kimberly-Clark (KMB), Capital One Financial (COF), Bolt Group (PHM), Mattel (MAT) and more.
Wednesday, July 24
Ford Motor (F)
Detroit-based automaker Ford Motor Co. (F) is scheduled to report second-quarter earnings after the market closes on Wednesday. Earnings per share are expected to decline year-over-year, while revenue is expected to grow 5%.
Ford recently reported a 1% increase in second-quarter deliveries to 536,050, driven by strong performance from electric and hybrid vehicles. F-150 Lightning sales increased 77%, while overall electric vehicle sales rose 61%. Overall truck sales rose 5% to 308,920, with the F-Series up 30%. Hybrid vehicle sales also increased 56% to 53,822.
Yannis Zourambanos, author at Seeking Alpha, notes that Ford’s stock has underperformed, losing nearly 50% from its 2022 highs, and is lagging behind General Motors. With capital spending and free cash flow down, investors should look at the 4.3% dividend yield, but caution is warranted given the challenging macroeconomic environment, the analyst said.
- Consensus EPS Estimate: $0.68
- Consensus Revenue Estimate: $44.58 Billion
- Earnings Overview: Ford has missed earnings per share and revenue expectations in 5 of the past 8 quarters.
He also reported: AT&T (T), IBM (IBM), Annaly Capital Management (NLY), Newmont (NEM), NextEra Energy (NEE), QuantumScape (QS), ServiceNow (NOW), Chipotle Mexican Grill (CMG), Waste Management (WM) , General Dynamics (GD), Thermo Fisher Scientific (TMO), Las Vegas Sands Corp. (LVS), KLA Corporation (KLAC), Deutsche Bank (DB), International Paper Company (IP), Boston Scientific Corporation (BSX), CME Group (CME), Whirlpool (WHR) and more.
Thursday, July 25
American Airlines (AAL) and United Airlines (UAL)
Following disappointing results from Delta Air Lines (DAL) and United Airlines (UAL), American Airlines (AAL) and Southwest Airlines (LUV) will report second-quarter results on Thursday. Both American Airlines and Southwest Airlines are expected to report a 50% year-over-year decline in earnings, reflecting an uncertain macroeconomic environment with rising oil prices and rising interest rates.
Both Seeking Alpha’s Quant Rating system and Wall Street analysts maintain a Hold rating on both stocks.
“American Airlines shares are undervalued, with the stock priced as if bankruptcy were imminent, but the most likely outcome is share buybacks,” said Stone Fox Capital, which is bullish on AAL and LUV. Additionally, “Elliott Investment Management made a significant investment in Southwest Airlines Co. due to poor performance, calling for a leadership upgrade and forecasting a 77% upside potential. The airline is facing revenue and cost performance issues, and needs significant operational improvements to justify its current price relative to traditional airlines.”
- Consensus EPS estimates: AAL – $1.04; LUV – $0.51
- Consensus Revenue Estimates: AAL – $14.37B; LUV – $7.34B
- Earnings Overview: AAL has beaten EPS estimates in 7 of the past 8 quarters and LUV in just 3 of the past 8 quarters, while each has beaten revenue estimates in 50% of those reports.
He also reported: AbbVie (ABBV), RTX Corporation (RTX), Dow (DOW), Honeywell International (HON), Valero Energy (VLO), AstraZeneca (AZN), Union Pacific (UNP), TotalEnergies SE (TTE), and Unilever PLC (UL) , Sanofi (SNY), Northrop Grumman (NOC), Baker Hughes Company (BKR), Weyerhaeuser Company (WY), Stellantis NV (STLA), Juniper Networks (JNPR), Norfolk Southern (NSC), and New York Community Bancorp (NYCB) , Hasbro (HAS), Harley-Davidson (HOG) and more.
Friday, July 26
3m (mm)
Minnesota-based 3M (MMM) is scheduled to release its second-quarter update on Friday, before the opening bell. Analysts are expecting a more than 20% decline in the company’s net income and revenue.
Recently, Manish Batulawala, the CFO of MMM, resigned to become the CFO of Archer Daniels Midland (ADM). His last day on the job will be July 31.
The stock is rated “Hold” by Wall Street analysts as well as Seeking Alpha’s Quant Rating system.
Stephen Simpson, author of SA, expects MMM’s second-quarter results to underperform its multi-industry peers, with an organic contraction of about 1%. The auto electrification and electronics businesses are expected to be healthier, but short-cycle consumer goods could be weak. The analyst noted that Bill Brown has been named the new CEO, with the potential for a meaningful turnaround.
- Consensus EPS Estimate: $1.68
- Consensus Revenue Estimate: $5.84 Billion
- Earnings Overview: Google has beaten earnings per share expectations in 7 of the past 8 quarters, beating revenue estimates in 6 of those reports.
He also reported: WisdomTree (WT), Bristol-Myers Squibb Company (BMY), Colgate-Palmolive (CL), T. Rowe Price Group (TROW), Spirit Airlines (SAVE) and others.