Friday, July 8, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today’s Research Daily features new research reports on 16 major stocks, including ExxonMobil Corp. (XOM), Alibaba Group Holding Ltd. (BABA), and The Charles Schwab Corp. (SCHW). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can
see all of today’s research reports here >>>
ExxonMobil
shares have outperformed the Zacks Oil and Gas – Integrated – International industry over the past year (+47.5% vs. +31.0%). The Zacks analyst believes that the company’s bellwether status and an optimal integrated capital structure that has historically produced industry-leading returns make it a relatively lower-risk energy sector play.
The company made three oil discoveries in the Stabroek Block, which will increase its recoverable resources estimates to 11 billion oil-equivalent barrels. Also, it has significantly lower debt exposure than other integrated majors.
ExxonMobil has increased its stock repurchase program from $10 billion to $30 billion. The company has planned to execute the repurchases through next year. However, the energy giant’s above-average capital spending program has got investors concerned.
Also, the integrated energy major has been witnessing lower oil equivalent production volumes, which might affect the bottom line. As such, the stock warrants a cautious stance.
(You can
read the full research report on Exxom Mobil here >>>
)
Alibaba
shares have outperformed the Zacks Internet – Commerce industry over the year-to-date basis (+3.0% vs. -27.2%). The company’s fiscal fourth-quarter results were driven by solid momentum across its retail business. Growing China and International Commerce businesses remained positive.
Further, strength across cloud, Cainiao and local consumer services contributed well. Notably, its robust New Retail strategy which is gaining strong traction in the market remains a major positive. This is aiding growth in Tmall Import, Freshippo and Intime Department Stores.
Additionally, the company’s strengthening cloud business on the back of its expanding customer base continues to drive its performance. However, rising competition from domestic as well as foreign e-commerce companies poses a serious risk. Further, the regulatory concerns and resurgence of COVID cases in China remain major headwinds.
(You can
read the full research report on Alibaba here >>>
)
Charles Schwab
shares have declined -8.2% over the past year against the Zacks Financial – Investment Bank industry’s decline of -18.9%. The Zacks analyst believes that despite the recent rate hikes, relatively lower interest rates will likely keep hurting margins in the near term. Elevated operating expenses might hamper the company’s bottom-line growth to some extent.
However, Strategic acquisitions are likely to be earnings accretive and have reinforced Schwab’s position as a leading brokerage player. Offering commission-free trading has led to a rise in client assets and brokerage accounts, thereby improving trading revenues. Schwab’s efficient capital deployments reflect a solid balance sheet position, through which it will enhance shareholder value.
(You can
read the full research report on Charles Schwab here >>>
)
Other noteworthy reports we are featuring today include The Home Depot, Inc. (HD), The Estée Lauder Companies Inc. (EL) and Automatic Data Processing, Inc. (ADP).
Mark Vickery
Senior Editor
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly
Earnings Trends
and
Earnings Preview
reports. If you want an email notification each time Sheraz publishes a new article, please
click here>>>
Today’s Must Read
ExxonMobil (XOM) Gains From Discoveries at Stabroek Block
Retail & Cloud Businesses Momentum Benefits Alibaba (BABA)
Strategic Acquisitions Aid Schwab (SCHW) Amid Cost Concerns
Featured Reports
Focus on Pro Customers to Aid Home Depot’s (HD) Top Line
Per the Zacks analyst, Home Depot’s Pro segment has been a key driver of sales growth for several quarters. It is on track with investments to build a Pro ecosystem. Pro sales outpaced DIY sales in Q1
The Estee Lauder Companies (EL) Benefits From Skin Care Sales
Per the Zacks analyst, The Estee Lauder Companies is benefiting from solid Skin Care sales for a while now. Sales in the category increased 6% year over year in the third quarter of fiscal 2022.
High Recurring Revenues Aid ADP Despite Low Current Ratio
The Zacks analyst is optimistic about ADP’s strong business model, high recurring revenues, solid margins and robust client retention. Meanwhile, its low current ratio is a headwind.
Growing Demand For Energy Solutions Aid Generac (GNRC)
Per the Zacks analyst, Generac Holdings is gaining from its home standby generators and PWRcell energy storage systems solutions. Supply chain woes and stiff competition remain concerns.
Markel (MKL) Continues to Gain From Strategic Acquisitions
Per the Zacks analyst, strategic acquisitions have helped Markel to achieve profitable growth in insurance operations and boost its surety capabilities.
Zimmer Biomet’s (ZBH) Sales Rebound Despite Rising Costs
The Zacks analyst is encouraged by Zimmer Biomet’s robust revenue growth in the United States led by the ongoing recovery from COVID-19 impact. Yet, escalating operating expenses remain a concern.
Multi-Basin Assets & Cost-Savings Aid Murphy Oil (MUR)
Per the Zacks analyst Murphy Oil’s focus on developing high-margin multi-basin assets and ongoing cost-saving initiatives will drive its performance over the long run.
New Upgrades
High Demand, Strategic Acquisitions Aids Extra Space (EXR)
Per the Zacks Analyst, a high brand value, favorable self-storage industry fundamentals, strong presence in key cities and strategic acquisitions are key growth drivers for Extra Space Storage.
Strong Demand, Cost Reduction Actions Aid Ashland (ASH)
According to the Zacks analyst, Ashland is benefitting from strong demand across its industrial end markets. Actions to reduce operating costs should also support its margins.n
Apogee (APOG) Bets on Momentum in Segments, Pricing Actions
Per the Zacks analyst, improved performances at the Architectural Services and Framing Systems, pricing actions and benefits from recently completed restructuring actions will drive Apogee’s results.
New Downgrades
Weakening Memory Chip Demand to Hurt Micron’s (MU) Sales
Per the Zacks Analyst, weakening consumer spending on personal computers and smartphones is expected to negatively impact demand for Micron’s memory chips in the near term.
Rise in commodity inflation Hurts Cheesecake Factory (CAKE)
Per the Zacks analyst, rise in commodity inflation and labor expenses hurts Cheesecake Factory. For fiscal 2022, the company expects commodity inflation of low to mid-double-digits on an annual basis.
Currency Woes and Low Current Ratio Affect Omnicom (OMC)
The Zacks analyst is pessimistic about Omnicom’s (OMC) decreasing current ratio. Moreover, its vast international base exposes it to risks associated with adverse foreign exchange rate fluctuations.
Just Released: Zacks Top 10 Stocks for 2022
In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?
From inception in 2012 through 2021, the
Zacks Top 10 Stocks
portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
