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Dow 30 Stock Roundup: INTC, KO, V, MSFT, UTX, CAT, PG Beat

The Dow endured a volatile week, guided primarily by third-quarter earnings numbers. On Wednesday, the index suffering its worst single-day decline in almost seven weeks, only to rebound the very next day. Results of major components boosted the index or dragged it downward. Legislative developments through the week brightened prospects of the introduction of a new tax code, lifting investor sentiment.

Last Week’s Performance

The Dow gained 0.7% last Friday after financial stocks gained after the Senate passed the budget blueprint for fiscal 2018. Such news also bolstered gains for bank stocks. Economists commented that this move by the Senate cleared a big hindrance to the Republican efforts of rewriting the tax code. Meanwhile, existing home sales for September increased 0.7%. The index advanced 165.59 points to end above the psychological 23,000 milestone yet again.

The index increased 0.7% over last week, registering its sixth straight week of gains. This also marked the longest streak of weekly gains for the Dow after the blue-chip index posted seven weeks of gains in December.

President Trump chose not to certify Iran’s compliance with a nuclear deal struck in 2015. He reasoned that the country continued to ‘sponsor terrorism’ and in effect disrupted international peace.

Meanwhile, the Dow Jones closed above 23,000 points for the first time ever in its 120-year history. Moreover, robust third-quarter earnings results gave a boost to the equity market, with corporations in the United States showing signs of strength on the back of an improving economy.

The Dow This Week

The index lost almost 55 points on Monday to snap its six-day streak of gains after industrial stocks tanked. The Dow lost 0.2% after shares of General Electric GE nosedived 6.3%, suffering its biggest decline in a single day since August 2011. 

The industrial goods manufacturer reported relatively lackluster third-quarter 2017 results on Friday and missed the earnings estimate by a wide margin despite top-line growth. Meanwhile, investors remained hopeful that the new tax code would be signed into policy soon.

The index increased 0.7% on Tuesday, breaching yet another record level after industrial stocks rallied. The blue-chip posted its 54th record close so far this year, garnering almost 168 points in the process. Dow’s stellar rally was supported by astounding earnings from some of its top components such as 3M Co. MMM and Caterpillar Inc CAT.

The index declined 0.5% on Wednesday, suffering its worst single-day decline in almost seven weeks. The Dow shed 112.30 points after shares of aerospace giant, The Boeing Company BA tanked 2.9% following a year over year decline in revenues of two of its business units.

This marked the Dow’s biggest single-day dip since Sep 5, 2017 when the blue-chip index swooned 1.1% in a single day. Meanwhile, new home sales and durable orders for September came in above the consensus estimate.

The index gained 0.3% on Thursday, boosted by a bunch of strong earnings results which helped to trigger renewed enthusiasm among the Bulls on Wall Street. Meanwhile, the House of Representatives passed the budget blueprint.

This clears the way for the eventual passage of tax reforms by the Senate. Meanwhile, the ECB slashed its monthly bond purchases but also extended the duration of its quantitative easing policies.   

Components Moving the Index

Boeing reported adjusted earnings of $2.72 per share for third-quarter 2017, beating the Zacks Consensus Estimate of $2.65 by 2.6%. The bottom line, however, declined 22.5% from $3.51 in the year-ago quarter.

The company's revenues amounted to $24.31 billion in the reported quarter, missing the Zacks Consensus Estimate of $24.06 billion by 1%. The top line also declined 1.7% year over year.

Zacks Rank #2 (Buy) Boeing’s adjusted or core earnings per share expectation for 2017 is in the range of $9.90-$10.10, up from the prior guided range of $9.80-$10.00.The company still expects 2017 revenues in the range of $90.5-$92.5 billion. (Read: Boeing Tops Q3 Earnings Estimates, Updates '17 Guidance)

Intel Corp INTC reported third-quarter 2017 non-GAAP earnings of $1.01 per share, which beat the Zacks Consensus Estimate by 21 cents. The figure surged 26.3% from the year-ago quarter and 40.3% sequentially. Revenues totaled $16.15 billion, up 2.4% year over year and 9.4% quarter over quarter. The figure beat the Zacks Consensus Estimate of $15.71 billion. 

Zacks Rank #1 (Strong Buy) Intel guided fourth-quarter 2017 revenues of around $16.3 billion (+/-$500 million), up 3% year over year excluding McAfee. The projected figure is better than the Zacks Consensus Estimate of $16.12 billion. Earnings are anticipated to be 86 cents (+/- 5 cents) per share, up 15% on a year-over-year basis. The Zacks Consensus Estimate is currently pegged at 83 cents.

For fiscal 2017, management expects revenues of almost $62 billion (+/- $500 million), better than the Zacks Consensus Estimate of $61.37 billion and up $700 million from previous expectation. Earnings are now anticipated to be $3.25 (+/- 5 cents) per share, up from previous guidance of $3.00 and better than the Zacks Consensus Estimate of $3.01.  (Read: Intel Q3 Earnings Top on Robust Data-Centric Growth)

Caterpillar delivered another upbeat quarter with adjusted earnings per share surging 129% year over year to $1.95 in third-quarter 2017. Earnings also beat the Zacks Consensus Estimate of $1.22 by a wide margin of 60%. Revenues improved 24.6% year over year to $11.4 billion in the quarter, surpassing the Zacks Consensus Estimate of $10.6 billion.

Given the upbeat third-quarter performance, Caterpillar has hiked revenue guidance to the range of $44 billion from the prior range of $42-$44 billion. The company now projects earnings per share of $6.25 compared with previous guidance of $5.00 per share. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Coca-Cola Company KO reported better-than-expected third-quarter 2017 results. Third-quarter 2017 adjusted earnings of the company were 50 cents per share, surpassing the Zacks Consensus Estimate of 49 cents by 2%. Earnings also improved from the year-ago profit level of 49 cents helped by ongoing productivity efforts. Coca-Cola has a Zacks Rank #2.

Net revenues, however, declined 15% year over year to $9.1 billion due to the negative impact of structural items, marking the 10th consecutive quarterly decline in revenues. Revenues, however, surpassed the Zacks Consensus Estimate of $8.8 billion.

Organic revenues are expected to rise 3% in 2017. The company expects adjusted EPS to range from even to 2% decline from the prior year’s comparable EPS of $1.91. (Read: Coca-Cola's Q3 Earnings Beat Estimates on Healthy Drive)

McDonald's Corp. MCD posted mixed results in the third quarter of 2017. Adjusted earnings per share (EPS) of $1.76 surpassed the Zacks Consensus Estimate of $1.75 by 0.6% and improved 9% from the year-ago quarter. McDonald's has a Zacks Rank #3 (Hold).

Revenues of $5.75 billion declined 10% year over year, mainly due to the impact of the company’s strategic refranchising initiative. Moreover, the same lagged the Zacks Consensus Estimate of $5.80 billion by nearly 1%. (Read: McDonald's Tops Q3 Earnings on Solid Comps Growth)

The Procter & Gamble Company’s PG fiscal first-quarter core earnings of $1.09 per share beat the Zacks Consensus Estimate of $1.07 by 1.9%. The bottom line increased 6% from the prior-year quarter. P&G’s reported net sales of $16.65 billion surpassed the Zacks Consensus Estimate of $16.64 billion. The top line grew 1% from the year-ago level.

Zacks Rank #3 Procter & Gamble maintained its projection for the year and expects organic sales growth in the range of 2-3% for fiscal 2018. Core earnings per share growth is projected at 5-7% compared with fiscal 2017 core earnings of $3.92 per share. (Read: Procter & Gamble Beats Q1 Earnings & Revenue Estimates)

United Technologies Corporation UTX reported solid third-quarter 2017 results driven by superior organic growth and diligent execution of operational plans. Excluding restructuring and other non-recurring items, adjusted earnings for the reported quarter were $1.73 per share, which beat the Zacks Consensus Estimate by 5 cents.

Net sales in the reported quarter came in at $15,062 million compared with $14,354 million in the year-ago quarter and exceeded the Zacks Consensus Estimate of $14,886 million.

With strong third-quarter results, the company raised its full-year 2017 earnings guidance. Adjusted earnings are currently anticipated to lie within the $6.58–$6.63 per share range, as against the previously estimated range of $6.45−$6.60. Additionally, this Zacks Rank #3 company lifted its revenue guidance for 2017 from the previous projection of $58.5–$59.5 billion to $59–$59.5 billion. (Read: United Technologies Beats Q3 Earnings, 2017 View Up)

Visa Inc. V reported fourth-quarter fiscal 2017 (ended Sep 30, 2017) earnings of 90 cents per share, beating the Zacks Consensus Estimate by 5.9%. Also, the bottom line improved 14% year over year. Net operating revenues of $4.9 billion surpassed the Zacks Consensus Estimate of $4.6 billion. Also, revenues climbed 14% year over year.

Zacks Rank #2 Visa provided guidance for fiscal 2018. It expects annual net revenue growth of high single digits on a nominal dollar basis, and earnings per share growth of mid-40s on a GAAP nominal dollar basis, and high end of mid-teens on an adjusted, non-GAAP basis (EPS includes approximately 1% to 1.5% of positive foreign currency impact). (Read: Visa Beats on Q4 Earnings and Revenues, Guides for 2018)

Microsoft Corporation MSFT reported first-quarter fiscal 2018 earnings of 84 cents per share, which beat the Zacks Consensus Estimate by 12 cents. The figure increased 16.7% on a year-over-year basis. Revenues of $24.54 billion increased almost 12% from the year-ago quarter (up 11% in constant currency or CC). Further, it exceeded the Zacks Consensus Estimate of $23.53 billion.

For the second-quarter of fiscal 2018, Zacks Rank #3 Microsoft expects foreign exchange to increase revenue growth by 1 point, COGS growth by 1 point and operating expense growth by 2 points. For the fiscal year 2018, Microsoft expects FX to increase revenue, COGS and operating expense growth at the company level by 1 point. (Read: Microsoft Q1 Earnings Beat on Strong Azure Growth)

Performance of the Top 10 Dow Companies

The table given below shows the price movements of the 10 largest components of the Dow, which is a price weighted index, over the last five days and during the last six months. Over the last five trading days, the Dow has gained 1%.

Ticker

Last 5 Day’s Performance

6-Month Performance

MMM

+7.0%

+19.5%

GS

+1.3%

+6.9%

IBM

+4.4%

-4.0%

HD

+1.9%

+8.7%

BA

-0.6%

+42.7%

UNH

+8.6%

+19.9%

MCD

-0.8%

+16.5%

TRV

+4.2%

+8.1%

JNJ

+3.9%

+14.8%

AAPL

+0.3%

+9.6%

Next Week’s Outlook

Earnings will likely continue to provide direction to the Dow over next week as well. Investors have already received encouraging news on the policy front, a development which is likely to provide further impetus to stocks in the days ahead. At the same time, crucial economic reports set for release over the next few days are also likely to have a major impact on markets’ fortunes. If most of these, including crucial GDP numbers are encouraging in nature, stocks are likely to chalk up further gains in the week ahead. 

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Boeing Company (The) (BA): Free Stock Analysis Report
 
Coca-Cola Company (The) (KO): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
3M Company (MMM): Free Stock Analysis Report
 
United Technologies Corporation (UTX): Free Stock Analysis Report
 
General Electric Company (GE): Free Stock Analysis Report
 
Caterpillar, Inc. (CAT): Free Stock Analysis Report
 
McDonald's Corporation (MCD): Free Stock Analysis Report
 
Procter & Gamble Company (The) (PG): Free Stock Analysis Report
 
Intel Corporation (INTC): Free Stock Analysis Report
 
Visa Inc. (V): Free Stock Analysis Report
 
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