Good morning investors!

Every weekend we publish our “Earnings Recap” — an in-depth summary of the earnings reports for stocks that we cover.

Earnings season is winding down but three of the stocks we cover reported quarterly results this week — here is the list of companies we focused on:

• AbbVie, IBM, Union Pacific, Waste Management, Chipotle, 3M, L3Harris, and Tractor Supply Company

Let’s dive in.

AbbVie (ABBV)

AbbVie has increased its profit forecast for 2024 following strong sales of its immunology drugs and quarterly results that exceeded Wall Street expectations.

The company reported quarterly sales of $14.46 billion, surpassing the estimated $14.03 billion. Net income was $1.4 billion, or $2.65 per share, above estimates of $2.57 per share.

Despite a nearly 30% decline in global sales of its arthritis drug Humira to $2.81 billion, this still exceeded analyst expectations of $2.76 billion. The decline is attributed to the introduction of 10 biosimilar versions in the U.S.

AbbVie is focusing on newer immunology drugs, Skyrizi and Rinvoq, to counteract the decline in Humira sales. Skyrizi's global sales were $2.73 billion, beating the expected $2.59 billion, while Rinvoq's sales were $1.43 billion, surpassing the $1.36 billion estimate.

The company has revised its sales forecasts for Skyrizi to $11 billion and Rinvoq to $5.7 billion for the year, increases of $300 million and $100 million, respectively.

AbbVie has raised its profit forecast range by 10 cents, now expecting to earn between $10.71 and $10.91 per share.

ABBV shares +5.8% so far this week.

IBM (IBM)

IBM's second-quarter results exceeded analysts’ expectations. 

Revenue increased by 1.9% to $15.48 billion compared to the previous year. Net income rose to $1.83 billion, or $1.96 per share, from $1.58 billion, or $1.72 per share, a year earlier.

The software business generated $6.74 billion in revenue, a 7% increase and higher than the expected $6.49 billion. The consulting unit brought in $5.18 billion in revenue, a 0.9% decrease and below the $5.23 billion estimate. The infrastructure segment, including mainframe computers, reported $3.65 billion in revenue, up 0.8% and exceeding the $3.51 billion expectation.

CEO Arvind Krishna noted that IBM’s generative artificial intelligence business has grown to over $2 billion, up from over $1 billion in April.

IBM now anticipates free cash flow for 2024 to exceed $12 billion, an increase from the previous estimate of about $12 billion.

IBM shares are +4.9% so far this week.

Union Pacific (UNP)

Union Pacific reported strong growth in its second-quarter profit as it continues streamlining its operations.

The railroad company’s net income was $1.67 billion, or $2.74 per share, up from $1.57 billion, or $2.57 per share, a year earlier. Revenue increased by 1% to $6.0 billion, slightly below analysts' $6.05 billion prediction.

Despite a 22% decline in coal shipments and a 12% drop in metals shipments, overall volume slightly increased. The railroad improved efficiency by increasing the average maximum train length by 2% to 9,544 feet and enhancing productivity by 5% to 1,031 car miles per employee. Expenses were reduced by 4% to $3.61 billion.

Union Pacific's improvements stem from various operational changes, focusing on longer trains and a smaller workforce. Future gains are expected as employees work towards handling more freight efficiently to attract more business.

While predicting overall volume growth remains uncertain, the railroad is confident in profit improvement and plans to repurchase about $1.5 billion of stock this year.

UNP shares are -2.4% so far this week.

Waste Management (WM)

Waste Management's second-quarter results missed Wall Street expectations.

The company earned $1.69 per share on $5.4 billion in sales, below the anticipated $1.83 per share on $5.43 billion in sales.

Despite a 5.5% revenue increase driven by a 6.8% rise in core pricing and higher recycled commodity values, collection and disposal volumes decreased by 0.3%.

The company raised its full-year guidance for adjusted operating EBITDA and free cash flow by $100 million.

WM shares are -9.6% so far this week.

Chipotle (CMG)

Chipotle's quarterly earnings and revenue exceeded analysts’ expectations, driven by increased restaurant traffic despite an industry slowdown.

The company reported second-quarter net income of $455.7 million, or 34 cents per share, up from $341.8 million, or 25 cents per share, a year earlier, with net sales rising 18.2% to $2.97 billion.

Profits rose due to price hikes that countered higher avocado prices and increased oil usage for frying tortilla chips.

Same-store sales increased by 11.1%, surpassing the expected 9.2%. Despite social media backlash over allegedly smaller burrito bowls, traffic grew 8.7%.

During the quarter, Chipotle opened 52 new company-owned locations and one international licensed restaurant.

The company maintained its full-year outlook for same-store sales growth in the mid- to high-single-digit percentage and plans to open 285 to 315 new restaurants this year.

CMG shares are -4.7% so far this week.

3M (MMM)

3M beat on the top and bottom lines and raised the lower end of its annual adjusted profit forecast.

In the latest quarter, 3M reported an adjusted profit of $1.93 per share, surpassing analysts' estimates of $1.68. Its adjusted revenue was $6 billion, exceeding the expected $5.88 billion.

Last year, 3M reduced its global workforce by 10%, shifted to an export-led business model, closed several facilities, and spun off Solventum, which helped it manage slow demand.

The company now anticipates a full-year adjusted profit of $7.00 to $7.30 per share, up from the previous forecast of $6.80 to $7.30, , citing benefits from restructuring measures and rising demand for electronics..

MMM shares are +5.2% so far this week.

L3Harris (LHX)

L3Harris Technologies reported mixed second-quarter results.

The company reported net income of $367 million, or $3.24, surpassing the analyst estimate of $3.17. Revenue for the quarter was $5.3 billion, matching expectations. This represents a 13% increase in revenue, primarily due to the acquisition of Aerojet Rocketdyne and 1% organic growth from higher demand in the Communication Systems segment.

While SAS revenue remained flat year-over-year, growth in Space Systems and classified Intel and Cyber programs was balanced by declines in Airborne Combat Systems and reduced antenna business revenues. Similarly, IMS revenue was stable, with gains in Maritime programs offset by decreases in Commercial Aviation.

The Communication Systems segment saw a 4% revenue increase, driven by higher volumes in Broadband Communications and increased Department of Defense sales in Tactical Communications.

L3Harris delivered $714 million in adjusted free cash flow, bolstered by net income growth, improved working capital, and adjustments for acquisitions and severance costs.

The company reported $5.2 billion in orders with a book-to-bill ratio of 1.0x.

For the full year, L3Harris expects earnings per share between $12.85 and $13.15, with revenue ranging from $21 billion to $21.3 billion.

LHX shares are +3.9% so far this week.

Tractor Supply Company (TSCO)

Tractor Supply Company reported a mixed second quarter with better-than-expected earnings but sales that missed analysts' estimates.

Net income rose 0.9% to $425.2 million, or $3.93 per share, exceeding the expected $3.82 per share. Net sales increased by 1.5% to $4.247 billion, falling short of the $4.28 billion estimate.

Same-store sales declined by 0.5%, with a 0.6% drop in transaction count partially offset by a 0.1% increase in the average ticket.

The company opened 21 new Tractor Supply stores and three new Petsense stores during the quarter. It plans to open 80 new Tractor Supply stores and 10 to 15 new Petsense stores this year.

Tractor Supply tightened its full-year guidance, now forecasting sales between $14.8 billion and $15.0 billion, compared to the previous $14.7 billion to $15.1 billion. Same-store sales are expected to range from a 0.5% decline to a 1% increase, slightly adjusted from the previous range of a 1% decline to a 1.5% increase. The expected EPS is now between $10.00 and $10.40, compared to the prior range of $9.85 to $10.50.

TSCO shares are -1.4% so far this week.

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Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.