Earnings Previews: APA Corp., Energy Transfer, Lucid, Robinhood

The three major U.S. equity indexes closed down slightly Monday. The Dow Jones Industrial Average dipped by 0.14%, the Standard & Poor’s 500 slipped by 0.28%, and the Nasdaq Composite fell by 0.18%. Seven of 11 sectors, led by energy (down 2.1%) and real estate (off 0.9%) closed lower while consumer staples (up 1.2%) and consumer cyclicals (an increase of 0.5%) were the leading gainers. The U.S. Labor Department released its report on June job openings and turnover (JOLTS) this morning. The number of job openings fell to 10.7 million in June from a revised total of 11.3 million in May. All three major indexes are down in the first half hour of trading Tuesday morning.

After markets closed Monday afternoon, Activision Blizzard traded up by less than 1% after missing analysts’ consensus earnings estimate. Shares still trade well below (around $80) the $95 per share acquisition price Microsoft will pay when (if) regulators approve the deal.

Devon Energy beat estimates on both the top and bottom lines and raised 2022 production guidance by 3% and lifted its estimated capital spending from around $2.1 billion to a new range of $2.2 billion to $2.4 billion. Shares traded down about 0.8% Tuesday morning.

Diamondback Energy also beat top- and bottom-line estimates, but shares traded lower by about 2%. The company said capex for the current quarter would range between $470 million and $510 million. Capex for the first half of the year was $905 million.

Before markets opened Tuesday morning, U.K.-based BP also beat earnings per share (EPS) and revenue estimates. Shares for the energy company traded up about 3.2% Tuesday morning.

Caterpillar topped the consensus EPS estimate but missed on revenue. The stock traded down about 5% on worries about dealer sales.

Marathon Petroleum beat top- and bottom-line estimates, and shares traded up about 2%.

After U.S. markets close Tuesday afternoon, Airbnb, AMD, Coterra Energy, and Occidental Petroleum will be reporting quarterly results. Wednesday morning, before markets reopen, Livent, PayPal, Starbucks, and Under Armour are reporting.

Here are previews of five earnings reports due out after markets close Wednesday.

APA

Independent oil and gas producer APA Corp. (NYSE: APA) has added about 92% to its share price over the past 12 months. Since posting a 52-week high in early June, however, the stock dropped 38% in just four weeks before bouncing higher in the past two weeks. Crude oil prices have fallen about 13% in the past month, primarily because of recession fears. Energy producers such as APA are quite sensitive to fluctuations in crude prices and investor sentiment. Both remain volatile.

Analysts have stayed bullish on the stock, with 15 of 27 giving the shares a rating of Buy or Strong Buy and 11 more rating the stock a Hold. At the current price of around $36.00, the upside potential based on a median price target of $52.00 is about 44.4%. At the high price target of $75.00, the upside potential is about 108.3%.

For the company’s fiscal second quarter of 2022, analysts expect APA to report revenue of $2.63 billion, down 31.3% sequentially and up nearly 48% year over year. Adjusted EPS is expected to come in at $2.35, up 22.3% sequentially and an increase of 237% year over year. For the full 2022 fiscal year, EPS is forecast at $9.34, up 139.4%, on sales of $10.87 billion, a gain of 37.1%.

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The stock trades at a multiple of 3.9 times expected 2022 EPS, 3.9 times estimated 2023 earnings of $9.55, and 4.5 times estimated 2024 earnings of $8.07 per share. APA’s 52-week range is $15.54 to $51.65.The company pays an annual dividend of $0.50 (yield of 1.35%). Total shareholder return for the past year was 94.5%.

Energy Transfer

Natural gas pipeline company Energy Transfer LP (NYSE: ET) has added about 14.8% to its share price over the past 12 months. For the year to date, the common units are up more than 37%. Like many pipeline operators, Energy Transfer is a master limited partnership (MLP) that pays a generous distribution to unitholders and is mostly shielded from price movements because the bulk of the company’s capacity is contracted. The company is aiming to boost its distribution to around 50% of available cash and is working to build a liquefied natural-gas export terminal along the Gulf Coast.

Analysts are solidly bullish on Energy Transfer with all 16 brokerages covering the company giving the shares a rating of Buy or Strong Buy. At the current price of around $11.30, the upside potential based on a median price target of $15.00 is about 33%. At the high price target of $20.00, the upside potential is about 77%.

For the second quarter, analysts expect the company to report revenue of $20.33 billion, down 0.8% sequentially and up 34.6% year over year. Adjusted EPS is expected to come in at $0.24, down 48.5% sequentially and an increase of 20% year over year. For the full 2022 fiscal year, EPS is forecast at $1.20, down 37%, on sales of $80.87 billion, up 20%.

The common units trade at a multiple of 9.4 times expected 2022 EPS, 8.4 times estimated 2023 earnings of $1.35, and 7.8 times estimated 2024 earnings of $1.45 per share. Energy Transfer’s 52-week range is $7.96 to $12.48.The company pays an annual distribution of $0.92 (yield of 8.13%). Total shareholder return for the past year was 22.7%.

Lucid

Electric vehicle (EV) maker Lucid Group Inc. (NASDAQ: LCID) made its public market debut in a SPAC merger late in July of last year. The stock price more than doubled by mid-November but has fallen by almost two-thirds since then. Since going public, the shares are down 31%. EV subscription start-up Autonomy has said it would add 23,000 EVs, including some unspecified number of Lucid cars, to its fleet of Tesla vehicles. Autonomy expects to have 6,000 Teslas available by the end of the year; it has about 1,000 now. The company expects to reveal this month how many Lucid and other EVs from carmakers not named Tesla it will acquire this year.

Only six analysts cover the stock with three giving the stock a Buy or Strong Buy rating and two more rating the shares a Hold. At a current price of around $18.50, the upside potential based on a median price target of $30.00 is 62.2%. Based on the high target of $43.00, the upside potential is 132.4%.

Analysts expect the company to report 2022 fiscal first-quarter revenue of $157.12 million, up 172.4% sequentially. The consensus forecast calls for an adjusted loss of $0.31 per share, 6 cents better than the prior quarter’s loss. For the full 2022 fiscal year, the loss per share is forecast at $0.94, down from last year’s loss of $5.00 per share, on sales of $1.36 billion, up nearly 5,000%.

Lucid is not expected to report a profit in 2022, 2023, or 2024. The company’s enterprise value-to-sales multiple for 2022 is estimated at 20.3, for 2023 the multiple is 8, and for 2024 the multiple is 4.5. The stock’s 52-week range is $13.25 to $57.75. Lucid does not pay a dividend. Total shareholder return for the past year is negative 21.9%.

Robinhood

Within a week of its IPO in late July last year, shares of Robinhood Markets Inc. (NASDAQ: HOOD) doubled in price. As of Monday’s close, the stock traded down nearly 75% below that high and 76% below its IPO price. In April, the company announced that it planned to fire about 9% of its 3,800 employees. Investors and analysts will be interested to hear if user growth has turned positive and how crypto trading is doing.

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Just 15 brokerages cover the stock. Of those, five have a Buy or Strong Buy rating on the shares, and seven more rate the stock a Hold. At Wednesday’s closing price of around $9.00, the upside potential to the median price target of $10.50 is 16.7%. At the high price target of $28.00, the upside potential is 67.9%.

For the second quarter of 2022, revenue is forecast at $323.73 million, up 8.3% sequentially and down 42.7% year over year. Analysts are looking for an adjusted loss per share of $0.34 compared with a loss of $0.45 per share in the previous quarter and year-ago EPS of $0.18. For the full 2022 fiscal year, current consensus estimates call for an adjusted loss per share of $1.29, far below the 2021 fiscal year loss of $7.49 per share. Revenue is forecast at $1.45 billion, down 20.2%.

Robinhood is not expected to post a profit in 2022, 2023, or 2024. The stock’s 52-week range is $6.81 to $85.00. The company does not pay a dividend. The total shareholder return for the past year was negative 74.3%.

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