Market Overview

Dow Earnings: High Hopes For Chevron, Johnson & Johnson

Dow Earnings: High Hopes For Chevron, Johnson & Johnson
  • More than a third of the Dow components are expected to report earnings this week.
  • Only a health care giant and an oil supermajor are expected to show solid growth on both the top and bottom lines.
  • Both have beat earnings expectations in recent quarters.

We are in the heart of the fourth-quarter earnings reporting season, and more than a third of the 30 Dow Jones Industrial Average components are expected to share their results this week. Wall Street consensus forecasts call for mixed results from most of these companies, but a few stand out. In particular, Chevron Corporation (NYSE: CVX) and Johnson & Johnson (NYSE: JNJ) are expected to post solid growth on both the top and bottom lines.

Note that these results are for the period in which oil supermajor sold some geothermal assets and announced a nearly $20 billion capital and exploratory budget, while the health care giant pursed an acquisition of Actelion and it was a Barron's pick for its growth potential.

When Chevron shares its fourth-quarter results, the analysts on average predict that its earnings per share will have surged more than 60 percent from a year ago to $0.66. And the $33.76 billion in expected revenue would be more than a 15 percent gain. Note that this petroleum giant exceeded consensus EPS estimates by as much as 45 percent in the previous three quarters.

The forecast from 26 Estimize respondents is more optimistic, with EPS expected to come in at $0.70. But that would be only two cents higher than in the prior quarter. The consensus revenue estimate for the three months that ended in December is $32.69 billion. While less than Wall Street expects, that would still be the highest top line result in the past year.

Wall Street's consensus forecast for Johnson & Johnson calls for EPS to have risen from $1.44 in the same period of last year to $1.56. The New Jersey–based company has topped analysts' EPS expectations by at least two cents in the past four quarters. The 82 Estimize respondents have a consensus estimate of $1.59 per share for the three months that ended in December.

Estimize underestimated revenue in the past three quarters, and this time the respondents are looking for $18.21 billion, a bit shy of the Wall Street consensus forecast for the fourth quarter of $18.28 billion. Either figure would be less than 3 percent higher than in the year-ago period, as well as the second highest figure in the past six quarters.

Johnson & Johnson is scheduled to report its latest results before the opening bell Tuesday, while Chevron is expected to share its numbers first thing Friday morning.

The Rest Of The Dow

As mentioned, mixed results are anticipated from most of the rest of the Dow companies reporting this week. A higher profit but with declining revenue is forecast for Boeing, DuPont, McDonald's and Verizon. At Travelers, it will be the other way around, smaller earnings but with revenue growth, if the analysts are correct. Mixed results are expected from Intel, Microsoft, 3M and United Technologies as well.

The other standout is Caterpillar, which is predicted to show declines on both the top and bottom lines for the most recent quarter.

In the following week, look for quarterly reports from Dow components Apple, Exxon, Merck, Pfizer and Visa.

Latest Ratings for CVX

Oct 2020Credit SuisseReinstatesOutperform
Oct 2020Morgan StanleyMaintainsOverweight
Sep 2020B of A SecuritiesUpgradesNeutralBuy

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