Earnings Previews: Conagra, Ericsson, JPMorgan, Morgan Stanley, Taiwan Semiconductor

The three major U.S. equity indexes closed lower Monday. The Dow Jones industrials closed down 0.5%, the S&P 500 dropped 1.2% and the Nasdaq shed 2.3%. Nine of the 11 S&P sectors closed lower. Only utilities (up 0.6%) and real estate (unchanged) managed to avoid losses. A strengthening dollar is raising concerns that global results from U.S. multinationals will be weaker. All three major indexes were lower in Tuesday’s premarket session.

Before markets opened on Tuesday, PepsiCo beat consensus estimates on both the top and bottom lines, reaffirmed previous fiscal year earnings per share (EPS) guidance and raised its organic sales growth estimate from 8% to 10%. Shares traded up about 1.6% early Tuesday.

The June-quarter earnings season revs up later this week when the nation’s biggest banks begin releasing their quarterly results. Added loan loss reserves are expected to hack away at profitability. Recession fears could lead the country’s top four lenders to record loss provisions of $3.5 billion, compared to a benefit of $6.2 billion in the year-ago quarter.

Before U.S. markets open on Wednesday, Delta Air Lines and Fastenal will report quarterly results.

Here is a look at five companies on deck to report quarterly results before markets open Thursday morning.

Conagra

Over the past 12 months, the share price of packaged food giant Conagra Brands Inc. (NYSE: CAG) has increased by about 2.1%. Inflationary pressure was expected to raise costs for transportation and dairy and meat products. On the March-quarter conference call, CFO David Marberget noted that fiscal 2021 costs in Conagra’s meat business totaled $675 million, and the company is forecasting a 50% jump to about $1.2 billion for fiscal 2022.

Of 17 analysts following the stock, 13 have a Hold rating, while the rest rate the shares at Buy or Strong Buy. At a recent share price of around $35.60, the stock trades essentially at its median price target of $36.00. At the high price target of $44.050, the upside potential is 23.6%.

The consensus estimate for fiscal fourth-quarter revenue is $2.93 billion, which would be up 0.5% sequentially and by 6.9% year over year. Adjusted EPS are expected to come in at $0.63, up 9.3% sequentially and 16.7% higher year over year. The current estimates for the 2022 fiscal year that ended in May call for EPS of $2.35, down about 11.1%, on sales of $11.55 billion, up 3.3%.

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The stock trades at 15.2 times expected 2022 EPS, 14.0 times estimated 2023 earnings of $2.54 and 13.1 times estimated 2024 earnings of $2.72 per share. Conagra’s 52-week trading range is $30.06 to $36.97, and the company pays an annual dividend of $1.21 (yield of 3.52%). Total shareholder return over the past 12 months is 2.12%.

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