Earnings Previews: Alphabet, Coca-Cola, Enphase, Microsoft, Visa
The three major U.S. equity indexes closed higher on Friday, after staggering a bit in the early going. The Dow Jones industrials ended the day up 2.47%, the S&P 500 closed 2.37% higher and the Nasdaq rose 2.31%. All 11 sectors closed higher, led by materials (3.46%) and consumer cyclicals and financials (both 2.92%). Real estate (0.68%) and communications services (0.85%) posted the smallest gains.
The advance estimate (first of three) on third-quarter gross domestic product is due before markets open Thursday. Economists’ consensus estimate calls for a year-over-year increase of 2.3%. On Friday, the monthly report on personal consumption expenditures (PCE) will be released before U.S. markets open. Income is expected to rise by 0.3%, and core PCE inflation is forecast to rise by 0.4%. Both estimates match August readings. Some of the cash the company spends on share buybacks might be better spent on returning an income stream to investors.
All three major indexes traded higher in Monday’s premarket session.
After U.S. markets close Monday, Cadence Design, Discover Financial and Range Resources will report quarterly results. Before markets open Tuesday, General Electric, General Motors, UPS and Valero Energy are on deck to report results.
Here is a look at five companies on deck to report results Tuesday and Wednesday.
Alphabet
Over the past 12 months, the parent of Google, Alphabet Inc. (NASDAQ: GOOGL), has posted a share price decline of nearly 29%. Since posting a recent high in mid-August, the stock has dropped to a 52-week low earlier this month, but it has recovered somewhat in the last few days. The company reports quarterly results after markets close on Tuesday.
Last week’s market debacle after Snap warned of falling advertising revenue is not expected to affect the operator of the world’s most popular search engine. One thing that could give the stock an upward jolt would be the announcement of a dividend payment. Alphabet is sitting on a cash and investments pile of around $125 billion and really has no place to spend it.
Analysts continue to be universally bullish on the stock. Of 51 ratings, 48 have a Buy or Strong Buy rating, and the other three have Hold ratings. At a recent price of around $101.10 a share, the upside potential based on a median price target of $140.00 is 38.5%. At the high price target of $186.00, the upside potential is nearly 84%.
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Third-quarter revenue is forecast at $70.72 billion, which would be up 1.5% sequentially and by 8.6% year over year. Adjusted earnings per share (EPS) are pegged at $1.26, up 4.0% sequentially but down 10.0% year over year. For the full 2022 fiscal year, current consensus estimates call for EPS of $5.13, down 8.6%, on revenue of $255.89 billion, up 12.1%.
Alphabet stock trades at about 19.7 times expected 2022 EPS, 17.2 times estimated 2023 earnings of $5.88 and 14.9 times estimated 2024 earnings of $6.82. The stock’s split-adjusted 52-week trading range is $94.38 to $151.55. The company does not pay a dividend, and the total shareholder return for the past 12 months is negative 28.7%.
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