Friday, December 23, 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 Visa Inc. (V), Texas Instruments Incorporated (TXN) and EOG Resources, Inc. (EOG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Shares of Visa have held up a lot better than the broader market, reflecting the business’ resilience in the face of macroeconomic headwinds. The stock is down -5.4% this year, roughly in-line with the Mastercard’s -5.3% pullback, but significantly better than the -20.7% decline for the S&P 500 index. Visa is undoubtedly faced with a number of near-term challenges, but it is well positioned for long-term growth on the back of numerous buyouts and alliances. Constant investments in technology are solidifying its position in the payments market. A shift in payment to the digital mode is a boon for Visa.
The gradual revival of the global economy will keep driving consumer spending, expanding V’s business volumes in turn. Backed by a strong cash position, it remains committed to boosting shareholder value through share buybacks and dividend payments.
Shares of Texas Instruments have declined -12.1% over the past year against the Zacks Semiconductor – General industry’s decline of -42.7%. While Texas Instruments is faced with the same macroeconomic challenges that have brought down its peers, its business is lot more stable and resilient than other chip makers.
Texas Instruments is benefiting from solid rebound in the automotive market. Further, solid demand environment in the industrial, communication equipment and enterprise systems markets is a major positive.
Additionally, solid momentum across Analog segment owing to robust signal chain and power product lines, is contributing well to the top line. Also, robust Embedded Processing segment is contributing well. Notably, solid investments in new growth avenues and competitive advantages remain tailwinds.
EOG Resources shares have outperformed the Zacks Oil and Gas – Exploration and Production – United States industry over the past year (+44.9% vs. +28.4%). The company has an attractive growth profile, a huge inventory of drilling opportunities, upper-quartile returns and a disciplined management team. It has significant acreages in oil shale plays like Delaware, Bakken and Eagle Ford.
The company estimated 11,500 net undrilled premium locations in those promising shale plays, brightening the production outlook. Also, EOG’s balance sheet is significantly less levered than the composite stocks belonging to the industry. EOG strongly focuses on returning capital to shareholders, as reflected in its plan to return $5.1 billion of cash this year through regular quarterly and special dividends.
However, EOG Resources reported lower-than-expected third quarter earnings owing to higher lease and well expenses and transportation costs. Also, EOG is exposed to oil price volatility.
Other noteworthy reports we are featuring today include Petróleo Brasileiro S.A. – Petrobras (PBR), Bayer Aktiengesellschaft (BAYRY) and Aflac Incorporated (AFL).
Director of Research
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
Pre-Salt Reserves Boosts Petrobras (PBR), Debt Pile Hurts
While Petrobras’ stakes in Brazil’s attractive pre-salt oil reservoirs should boost its earnings outlook, the Zacks analyst is concerned over the company’s huge debt load of more than $47 billion.
Recent Drug Approvals Aid Bayer (BAYRY), Stiff Rivalry a Woe
Per the Zacks analyst, Bayer has undertaken several initiatives to strengthen its portfolio. However, competition from generic threats remains a concern.
Aflac (AFL) Banks on Growing U.S. Operations & Product Suite
The Zacks analyst believes that Aflac’s huge U.S. market share will drive sales growth, aided by a solid product suite. However, constraints in the Japan business are a concern.
Transformation Initiatives Aid Trane (TT), Low Liquidity Ail
The Zacks analyst is positive about Trane Technologies’ focus on improving its operating system and innovation through transformation initiatives. Low liquidity remains a concern.
Robust Digital Sales Aid Yum! Brands (YUM), Cost High
Per the Zacks analyst, Yum! Brands benefits from robust digitalization. During third-quarter 2022, the company reported digital sales of over $6 billion. However, high raising cost remain a concern.
Strong Demand & Acquisitions Aid Fortive’s (FTV) Performance
Per the Zacks analyst, Fortive’s performance is gaining from strong customer demand trends and synergies from the acquisitions. However, stiff competition and leveraged balance sheet remain concerns.
Sturdy Comps Run to Fuel Grocery Outlet’s (GO) Top Line
Per the Zacks analyst, Grocery Outlet’s opportunistic purchasing, marketing efforts and new product offerings facilitate comparable-store sales growth. Third-quarter comparable-store sales rose 15.4%.
Strategic Buyouts, Higher Rates Support LPL Financial (LPLA)
Per the Zacks analyst, LPL Financial will keep expanding through acquisitions driven a solid balance sheet position. Higher rates, solid advisor productivity and recruiting efforts will aid revenues.
Diversified Portfolio and Strengthening Backlog Aid FLEX
Per the Zacks analyst, Flex’s performance benefited from strong revenue growth across all business segments owing to ongoing secular trends. Also, rising customer backlogs are major tailwinds.
Higher Rates, Loan Demand to Support Hilltop Holdings (HTH)
Per the Zacks analyst, higher rates and loan growth will continue aiding Hilltop Holdings’ top line. Its strong balance sheet position and business restructuring initiatives are other tailwinds.
Xifaxan Patent Litigation, Macro Challenges Hurt Bausch (BHC)
Per the Zacks analyst, the ongoing patent litigation for one of the top drugs Xifaxan will remain an overhang and an earlier-than-expected generic entry will adversely impact the top line.
Decline in Demand, High Costs to Hurt Crown Holdings (CCK)
The Zacks Analyst is worried about the recent slowdown in demand across all segments of Crown Holdings. Unfavorable foreign currency impact and higher inventory and other costs also remain a concern.
Weak Demand and Rising Costs Hurt DENTSPLY SIRONA (XRAY)
Per the Zacks analyst, the weakened global demand and increased raw material supply chain and service cost coupled with higher cost of capital is adversely affecting DENTSPLY SIRONA’ top & bottom line
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.