Earnings Previews: American Airlines, AT&T, DR Horton, Freeport-McMoRan, Philip Morris

The three major U.S. equity indexes closed lower Monday, as equities tumbled following the report on home building release. The Dow Jones industrials closed down 0.7%, while the S&P 500 and the Nasdaq arch dipped by 0.8%. Eight of 11 S&P sectors closed lower. Health care (down 2.1%) and utilities (down 1.4%) were the big losers, while energy (up 2.3%) got the biggest boost.

The Census Bureau’s report on housing starts is due Tuesday morning and is expected to show a month-over-month dip of about 50,000 new homes being built. In early trading Tuesday, all three indexes were up by about 1.4% or more.

After markets closed Monday, IBM reported quarterly results that beat both profit and revenue estimates. While Big Blue said its outlook for the year’s second half remains unchanged, investors were not impressed. Shares traded down about 6.6% in the first 90 minutes of Tuesday’s regular trading session.

Before markets opened on Tuesday, Johnson & Johnson reported better-than-expected earnings and revenue while slightly trimming full fiscal year guidance. Shares were up less than 1% early Tuesday.

Lockheed Martin did not meet consensus expectations on either revenue or earnings. The defense contractor also reduced guidance, sending the shares down fractionally.

Halliburton beat consensus estimates on both the top and bottom lines. The stock traded down fractionally early Tuesday.

Truist Financial reported that it beat top-line and bottom-line estimates. Shares traded up more than 1%.

Our preview of companies reporting results late Tuesday or early Wednesday included Abbott Labs, ASML, Baker Hughes, Netflix and Omnicom.

These five companies will report quarterly results after Wednesday’s closing bell: Kinder Morgan, Las Vegas Sands, Steel Dynamics, Tesla and United Airlines.

Here is a look at five firms on deck to report results first thing Thursday morning.

American Airlines

Over the past 12 months, American Airlines Group Inc. (NASDAQ: AAL) has seen its share price decline by about 26.5%. For the second quarter of 2022, American and rival United are expected to post their first quarterly profit since before the pandemic. And as with United, rising costs for fuel and labor will likely weigh on profitability while revenues soar.

Unlike its rival, however, American faces debt maturities over the next three fiscal years totaling more than $15 billion. A lot has to go right for the airline to regain its past glory, and it would not take much to go wrong for American’s prospects to go sideways.

Analysts remain extremely cautious on American. Of 20 brokerages covering the stock, 15 have a Hold rating and just two have Buy ratings. At a recent share price of around $15.20, the upside potential based on a median price target of $17.00 is 11.8%. At the high target of $28.00, the upside potential is 84.2%.

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