Earnings Week Ahead: Steel Dynamics, NetFlix, Tesla, AutoNation and Honeywell in Focus
STEEL DYNAMICS: The U.S-based domestic steel producer and metal recycler is expected to report its third-quarter earnings of $4.62 per share, which represents year-on-year growth of over 800% from $0.51 per share seen in the same period a year ago.
The third-largest producer of carbon steel products in the United States would post revenue growth of over 114% to around $5.0 billion. The company has consistently beaten consensus earnings estimates for the last four quarters.
The company updated its earnings guidance for the third quarter of 2021 in September. For the period, earnings per share (EPS) were expected to be between $4.880-$4.920.
“Steel Dynamics is nearing the end of a multi-year investment cycle centered around the construction of a new, state-of-the-art steelmaking mill which comes online in mid-2021, positioning STLD’s FCF generation to increase from 2021 onwards. The company has a proven track record of shareholder returns, and is poised to deliver greater returns for investors, especially through share buybacks,” noted Carlos De Alba, equity analyst at Morgan Stanley.
STATE STREET: The second oldest continually operating United States bank is expected to post third-quarter earnings of $1.92 per share, which represents year-on-year growth of over 30% from $1.45 per share seen in the same period a year ago. The revenue is expected to increase around 6% to $2.95 billion.
|ELS||Equity Lifestyle Properties||$0.33|
Tuesday (October 19)
IN THE SPOTLIGHT: NETFLIX, JOHNSON & JOHNSON
NETFLIX: The California-based global internet entertainment service company is expected to report its third-quarter earnings of $2.57 per share, which represents year-over-year growth of over 45% from $1.74 per share seen in the same period a year ago.
The streaming video pioneer would post revenue growth of over 16% to around $7.5 billion. In the last two years, the company has beaten earnings per share (EPS) estimates just thrice with a surprise of nearly 21%.
NetFlix’s better-than-expected third-quarter earnings results could help the stock hit new all-time highs. The company’s shares surged over 17% so far this year and it hit a record high of $646.84 on October 7.
“NetFlix (NFLX) stock has emerged from its slump, jumping ~22% in <2 months. Estimates have remained relatively flat and NFLX now trades at 8.5x 2022E Rev, the top of its 3-year range. We expect 3Q net adds of 3.5MM and a 4Q guide of ~7-8MM. Squid Games has demonstrated the impact of a successful international strategy and, if done right, games like Oxenfree could achieve a similar Zeitgest moment. We remain ‘Buy’ rated with a price target of $737, representing 8.5x 2023 JEF Rev,” noted Andrew Uerkwitz, equity analyst at Jefferies.
JOHNSON & JOHNSON: One of the world’s largest and most comprehensive manufacturers of healthcare products is expected to post third-quarter earnings of $2.36 per share, which represents year-on-year growth of over 7% from $2.20 per share seen in the same period a year ago. The revenue to expected to increase over 12% to around $23.6 billion.
|FMBI||First Midwest Bancorp||$0.42|
|JNJ||Johnson & Johnson||$2.36|
|PM||Philip Morris International||$1.56|
|BK||Bank Of New York Mellon||$1.01|
|FITB||Fifth Third Bancorp||$0.91|
|KSU||Kansas City Southern||$2.09|
|ONB||Old National Bancorp||$0.36|
|AMX||America Movil Sab De Cv Amx||$6.43|
|AMOV||America Movil Sab De Cv||$0.31|
|CNI||Canadian National Railway USA||$1.42|
|UAL||United Airlines Holdings||-$1.51|
|UCBI||United Community Banks||$0.66|
|PG||Procter & Gamble||$1.59|
Wednesday (October 20)
IN THE SPOTLIGHT: TESLA
TESLA: The California-based electric vehicle and clean energy company is expected to report its third-quarter earnings of $1.52 per share, which represents year-over-year growth of 100% from $0.76 per share seen in the same quarter a year ago.
The high-performance electric vehicle manufacturer would report revenue of $13.16 billion. The electric vehicle producer has beaten earnings three times in the last four quarters.
“We expect Tesla will be upbeat in 3Q21 given record deliveries beating estimates by ~20k announced in early October. Furthermore, the company announced record sales of 56,000 in China with a total of 133,248 or 55% of total deliveries for the quarter coming from their Shanghai facility,” noted Jeffrey Osborne, equity analyst at Cowen.
“We look forward to management’s commentary on Tesla’s internal chip production strategy and capacity expansion plans. We also look forward to an update on the opening of the Berlin Gigafactory. Additionally, we look forward to an update on Tesla’s 4680 cells and the incremental deployment of its beta FSD. Finally, we look forward to an update on the timeline for Semi and Cyber truck release.”
|BKR||Baker Hughes Co||$0.21|
|FHN||First Horizon National||$0.35|
|NEP||Nextera Energy Partners||$0.61|
|CCI||Crown Castle International||$0.77|
|DFS||Discover Financial Services||$3.49|
|REXR||Rexford Industrial Realty||$0.12|
|FR||First Industrial Realty||$0.22|
|SLG||SL Green Realty||-$0.12|
|LVS||Las Vegas Sands||-$0.18|
|GL||Globe Life Inc||$1.90|
|CNS||Cohen & Steers||$0.89|
|TCBI||Texas Capital Bancshares||$1.10|
|CP||Canadian Pacific Railway USA||$0.93|
|MSM||MSC Industrial Direct||$1.27|
|UFPI||Universal Forest Products||$1.55|
|SNBR||Scs Group Plc||$1.43|
Thursday (October 21)
IN THE SPOTLIGHT: AUTONATION
The Fort Lauderdale-based automotive retailer AutoNation is expected to report its third-quarter earnings of $4.16 per share, which represents year-over-year growth of about 75% from $2.38 per share seen in the same period a year ago.
In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 47%. The automotive retail giant would post revenue of $6.5 billion.
“We are optimistic about the trajectory for new CEO, Mike Manley, previously in various leadership roles at FCA and Stellantis where he demonstrated leadership of highly complex organizations going through transformation changes in scale, scope and technology,” noted Adam Jonas, equity analyst at Morgan Stanley.
“Omni-channel strategy unclear and may result in loss of share. For New Vehicles, historically, market share & gross profit per unit have declined. For Used Vehicles, the standalone used car business model was unsuccessful in the late 1990s. The business mix/growth/margins are similar to the other traditional auto dealers, and the stock trades at a discount to its historical average and vs the dealer average.”
|IQV||IQVIA Holdings Inc||$2.12|
|WAL||Western Alliance Bancorporation||$2.23|
|FFBC||First Financial Bancorp||$0.52|
|TPH||Tri Pointe Homes||$0.91|
|CMG||Chipotle Mexican Grill||$6.30|
|PBCT||People’s United Financial||$0.33|
|SASR||Sandy Spring Bancorp||$1.09|
|ATLCY||Atlas Copco ADR||$0.47|
|FAF||First American Financial||$1.82|
|MMC||Marsh & McLennan Companies||$1.00|
|IPG||Interpublic Of Companies||$0.49|
|SAFE||3 Sixty Risk||$0.35|
|RCI||Rogers Communications USA||$0.81|
|PPBI||Pacific Premier Bancorp||$0.82|
|EWBC||East West Bancorp||$1.51|
|RHI||Robert Half International||$1.40|
Friday (October 22)
IN THE SPOTLIGHT: HONEYWELL INTERNATIONAL
The company which manufactures parts for planes made by Boeing and Airbus SE, Honeywell, is expected to report its third-quarter earnings of $1.99 per share, which represents year-over-year growth of about 28% from $1.56 per share seen in the same quarter a year ago.
In the last four consecutive quarters, on average, the company has delivered an earnings surprise of about 5%. The Charlotte, North Carolina-based company would post revenue growth of about 12% to $8.7 billion.
Last week, the company lifted its guidance for business jet deliveries and said the industry has almost completely shaken off the effects of the COVID-19 pandemic.
The worldwide technology and manufacturing company in its 30th annual Global Business Aviation Outlook forecasts up to 7,400 new business jet deliveries worth $238 billion from 2022 to 2031, up 1% in deliveries from the same 10-year forecast a year ago.
“We think that Honeywell (HON) stock currently is a better pick compared to Rockwell Automation stock, despite Rockwell’s revenue growing at a faster pace over the recent years. Honeywell trades at about 4.4xtrailing revenues, compared to 5.1x for Rockwell. Although both the companies saw a decline in revenue due to the pandemic, Rockwell has seen a sharp recovery aided by new orders and impact of ASEM, Kalypso, and Fiix acquisitions,” noted equity analysts at TREFIS.
“Honeywell, on the other hand, is still seeing slower revenue growth, primarily due to its exposure to the aerospace segment, which was one of the worst-hit businesses during the pandemic. However, there is more to the comparison. Let’s step back to look at the fuller picture of the relative valuation of the two companies by looking at historical revenue growth as well as operating margin growth.”
|CLF||Cliffs Natural Resources||$2.21|
|AIMC||Altra Industrial Motion||$0.82|