The five largest U.S. traded companies report June quarter earnings this week beginning Monday evening with Tesla. We previewed expectations for GE, Raytheon, Tesla, 3M and UPS last Friday, and we also had a look at what to look for from AMD, Alphabet and Microsoft. We will cover several more over the next few days.
By the end of this week, we shall have seen results from the five FAANG stocks. Here’s a preview of what to expect from the iPhone maker and two other top companies reporting quarterly results after markets close on Tuesday.
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Apple
The June quarter is typically Apple Inc.’s (NASDAQ: AAPL) least profitable and the one with the lowest reported revenue. This year is no different, except that revenue and EPS are both sharply higher than they were last year. Just last week, the company posted a new all-time high share price, but concerns remain related to threatened government regulation and an almost certain adjustment to the company’s business practices in the App Store. Even a new generation of iPhones due in September or October will not entirely allay these concerns.
Of 42 analysts covering the stock, 32 rate Apple as a Buy or Strong Buy. Seven analysts rate the stock a Hold and the other three give the shares a Sell or Strong Sell rating. At a price of around $148.50 a share, the implied upside at the median price target of $160 is 7.7%. At the high price target of $185, the upside potential is nearly 25%.
Wall Street expects the company to post revenue of $73.44 billion, down 18% sequentially but up 23% year over year. Earnings per share (EPS) are forecast to drop 28% to $1.01 sequentially and rise by 55% year over year. For the full year, revenue is forecast to come in at $365.59 billion, up nearly 30% year over year. EPS are forecast to total $5.18, or 58% higher than in 2020.
Apple stock trades at 28.7 times expected 2021 EPS, 27.9 times estimated 2022 earnings and 26.7 times estimated 2023 earnings. The stock’s 52-week range is $93.25 to $150.00. Apple pays an annual dividend of $0.88 (yield of 0.59%).
Starbucks
The share price of Starbucks Corp. (NASDAQ: SBUX) has risen by 67% over the past 12 months. Last year, the stock price rose by 38.2%, and shares are up about 17.5% so far in 2021. As the world recovered from pandemic lockdowns, Starbucks rode the wave. U.S. sales have already surpassed pre-pandemic levels, but store re-openings are happening in fits and starts in other countries.
So, the good news is that growth in U.S. and Chinese markets is strong, though nearly complete, and re-openings in the rest of the world are a current source of concern, but also a potential growth driver going forward.
Sentiment on Starbucks tilts toward the upside. Of 32 analysts surveyed, 19 rate the shares a Buy or Strong Buy. Another 12 have a Hold rating on the shares. Recently, the stock has traded close to its median price target of $125. At the high price target of $142, the upside potential for the share price is about 13.8%.
For the company’s fiscal third-quarter revenue, analysts are forecasting $7.26 billion, or 8.8% higher sequentially and up 72% year over year. EPS of $0.77 is miles ahead of last year’s loss of $0.46 per share, as well as up 25% sequentially. For the full fiscal year, analysts are looking EPS to rise by 156% year over year on a sales jump of 22.5% to $28.8 billion.
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Starbucks stock trades at 41.6 times expected 2021 EPS, 27.0 times estimated 2022 earnings and 13.6 times estimated 2023 earnings. The stock’s 52-week range is $74.56 to $126.32. Starbucks pays an annual dividend of $1.80 (yield of 1.43%).
Visa
Dow Jones industrial average component Visa Inc. (NYSE: V) has added about 28% to its share price over the past 12 months, including a year-to-date of around 13.7%. For comparison, American Express’s share price growth so far in 2021 is nearly 45% and its 12-month share price growth is almost 85%. And Visa’s market cap is around $528 billion compared to Amex’s $139.5 billion.
To boost its competitiveness, Visa last week announced the acquisition of a London-based fintech firm named Currencycloud for around $967 million to bolster its currency exchange offerings. Visa also launched a new branding campaign last week.
Of 38 analysts covering the stock, 33 rate the shares a Buy or a Strong Buy. At a trading price of around $248.20, the stock’s upside potential, based on a median price target of $269, is about 8.4%. At the high price target of $305, the implied upside is about 23%.
The consensus estimate for third fiscal quarter revenue is $5.85 billion, or up 2% sequentially and nearly 21% year over year. EPS are forecast to slip by about 2.4% sequentially to $1.35 in the quarter but increase by around 27% year over year. For the full fiscal year, the current estimates call for EPS of $5.66 (up 12.4% year over year) and revenue of $23.67 billion (up 8.34%).
Visa stock trades at 43.7 times expected 2021 EPS, 34.8 times estimated 2022 earnings and 29.2 times estimated 2023 earnings. The stock’s 52-week range is $179.23 to $250.46. Visa pays an annual dividend of $1.28 (yield of 0.51%).
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