Chevron Corp (CVX): Oil and natural gas prices have continued to rise after the Russian invasion of Ukraine, and this has no doubt helped Chevron. The California-based company said in a recent investor presentation that it’s increasing production in the Permian Basin. The Permian Basin is the largest U.S. production area, a giant shale oil field spanning parts of Texas and New Mexico.
Chevron’s unconventional production, which typically involves horizontal drilling and fracking, grew to a record 692,000 barrels of oil equivalent per day in the Permian Basin during the first quarter. The company raised 2022 output guidance for the area to between 700,000 and 750,000 barrels per day. This represents an increase of over 15% from 2021. The company is on track to raise the Permian Basin’s output to 1 million barrels a day by 2025.
However, Chevron is not seeking to ramp up overall production too much. Typically, when oil and gasoline prices climb, oil firms invest heavily in increasing production. But right now, Chevron is reaping higher profits without looking to flood the market with increased supply too quickly.
World Wrestling Entmnt (WWE): “WWE generated strong first quarter results that reflected robust demand for our events and increased consumption of programming across platforms,” Chief Financial Officer Frank Riddick said during the May 5 earnings call. For the second quarter, WWE estimates adjusted operating income between $80 million and $90 million. That’s an increase of 17% to 32% from the same period last year.
The company suspended its live events due to the Covid-19 pandemic, and returning to the ring in July 2021 has been a major boost for WWE stock. Domestic and international ticket sales and sponsorships generated $23.1 million in revenue in the first quarter alone. That compares with $57.8 million for all of 2021.
While WWE’s ratings have varied between relatively stagnant and slightly down over the past year, executive leadership isn’t concerned. And while the U.S. remains its bedrock, the company has seen a 54% increase in international viewership over 2021. That was due to previously-announced deals in the U.K., Latin America, China, India and Germany. To continue expanding that reach, WWE finalized an agreement with NBC Group. The deal brought its content to the Middle East and North Africa region during the first quarter.
ON Semiconductor Corp (ON): The Phoenix-based company, also known as Onsemi, said its earnings per share more than quadrupled in the most recent quarter and for all of 2021. Strong demand for sophisticated electronics in electric and gas cars, as well as chips for industrial automation, drove its results.
Onsemi is a turnaround story. A maker of power control and sensing chips, it has been weeding out less-profitable products and selling off older chip fabrication plants, moving to what it calls a “fab-liter” model. The result? Its gross profit margin under generally accepted accounting principles rose to 45.1% in the fourth quarter from 34.4% in the year-earlier quarter.
For instance, the company’s silicon carbide products for electric cars could be at a run rate of $1 billion in revenue by the end of 2023, said Piper Sandler analyst Harsh Kumar. That figure could balloon to $2 billion by 2025, Kumar said.
Northrop Grumman Corp (NOC): Northrop Grumman fills in the role of a leader within a cyclical area of the market that had struggled as a laggard for years until Vladimir Putin’s Russia attacked Ukraine in February. Meanwhile, China-Taiwan tensions continue to remain high.
On Northrop’s April 28 first-quarter earnings call, CEO Kathy Warden said the budget request fully funds initial production of the B-21 Raider stealth bomber. Biden’s defence budget plan also includes a “significant year-over-year increase in development funding” for a new intercontinental ballistic missile known as the Ground-Based Strategic Deterrent.
The Air Force plans to spend $20 billion for B-21 production over five years. In 2020, Northrop received a $13.3-billion contract to develop the new ICBM.
While Northrop’s revenue and EPS have trended lower in recent quarters, those and other programs are expected to fuel growth in 2023 and beyond. Northrop also recently announced a 10% increase in its quarterly dividend, to $1.73. That makes 19 straight years of higher dividends.
Baker Hughes Co Cl A (BKR): The oilfield services and equipment giant reported first-quarter quarterly revenues of $4.84 billion for Q1, missing consensus estimates of $4.99 billion. Its first quarter adjusted earnings per share of 15 cents also fell short of the expected 19 cents per share.
Despite the troubles, Baker Hughes’ revenue was up 1% year-over-year and its adjusted EPS is up 26% during the same period, due to strong demand. Baker Hughes equipment and technologies facilitate onshore and offshore well development, pipelines, gas storage facilities and refinement processes in more than 120 countries.
It is also a leading engineering firm in the construction of import and export facilities for liquefied natural gas (LNG), which is undergoing a boom in the U.S. following the restructuring of natural gas markets following Russia’s invasion of Ukraine.
Oil and natural gas prices have spiked well above 10-year highs as Russia’s war on Ukraine snarled international supply lines just as energy demand rebounded from pandemic lows.
But the challenge of devising an exit strategy from Russian operations constructive to shareholder interests, and of wrestling with record-setting inflation sweeping across oil industry labour, field operations and equipment markets countered the price gain benefits.
