Friday, November 25, 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 Exxon Mobil Corporation (XOM), Meta Platforms, Inc. (META) and Eaton Corporation plc (ETN). 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 >>>
Exxon Mobil shares have handily outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+85.5% vs. +55.6%). The company’s bellwether status and optimal integrated capital structure that has historically produced industry-leading returns make it a relatively lower-risk energy sector play.
The firm has made more than 30 discoveries in offshore Guyana since 2015. ExxonMobil also has a strong presence in the prolific Permian Basin, where it expects to boost production volumes by 25% in 2022. The energy major has significantly lower debt exposure than composite players belonging to the industry. XOM recently reported strong third-quarter earnings owing to higher prices and production, and strong refining margins.
However, the company has been constantly bearing the brunt of increasing expenses, adversely affecting the income. Also, the aggressive capital budget remains a headwind for the company. As such, the stock warrants a cautious stance.
(You can read the full research report on Exxom Mobil here >>>)
Shares of Meta Platforms have been laggards this year, with the market unhappy with management's spending plans on the metaverse given the uncertain pay off from the project over the near to medium term. On top of the metaverse spending issue is the weak outlook for digital ad spending in the current uncertain macroeconomic backdrop. Unfavorable forex, targeting and measurement headwinds due to Apple’s iOS changes, normalization of e-commerce after the pandemic peak and higher inflation hurt growth in the reported quarter.
User base in Europe declined in the reported quarter. Meta’s fourth-quarter guidance reflects macroeconomic and forex concerns. Weak advertising demand is a headwind. Meta expects Reels to monetize much slower than feed or stories.
However, Meta is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its products like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.
(You can read the full research report on Meta Platforms here >>>)
Shares of Eaton have declined -1.3% over the past year against the Zacks Manufacturing - Electronics industry’s decline of -10.2%. The company’s global operations expose it to unpredictable currency translation, cyber-attacks and security breaches, which might impact operations. The shortage of raw materials and supplier insolvencies might impact production and operations.
However, Eaton’s third-quarter earnings per share were better than expected. ETN’s research and development investments allowed it to develop products for providing efficient power management solutions to customers.
The spin-off of non-core businesses and acquisitions will allow Eaton to further expand operations. Eaton's strategy to manufacture in the zone of sale has helped it reduce costs. Strong cash flow is supporting the company in debt reduction and dividend payments.
(You can read the full research report on Eaton here >>>)
Other noteworthy reports we are featuring today include Canadian Natural Resources Limited (CNQ), Keysight Technologies, Inc. (KEYS), and ANSYS, Inc. (ANSS).
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
ExxonMobil (XOM) Gains From Discoveries at Stabroek Block
User Growth, Instagram Strength Aids Meta Platforms (META)
Wide Market Reach & New Product Development Aid Eaton (ETN)
Diverse Production Mix to Aid Canadian Natural (CNQ)
The Zacks analyst sees Canadian Natural's diverse production mix facilitating long-term value and reducing risk profile but is worried about the company's debt maturities each year out till 2027.
Keysight (KEYS) Rides on Solid Demand Trends in 5G, Auto
Per the Zacks analyst, Keysight is likely to benefit from the proliferation of electronic content in vehicles, momentum in space and satellite applications and accelerated pace of 5G deployment.
Rising Customer Demand Across Several Verticals Aid ANSYS (ANSS)
Per the Zacks analyst, ANSYS' performance benefitted from higher customer demand across aerospace and defense, high-tech and automotive sectors. However, stiff competition is a major headwind.
High AUM Aids Carlyle's (CG) Organic Growth Amid High Costs
Per the Zacks Analyst, a rise in assets under management and efforts to scale investment platforms and operations will drive Carlyle's organic growth amid rising incentive fee-related compensation.
eSignature Strength Boosts DocuSign (DOCU) Despite Expenses
The Zacks analyst is positive about DocuSign's (DOCU) top line as it is significantly benefiting from continued customer demand for eSignature. However, escalating expenses are headwinds.
Ionis' (IONS) Dependence on Collaboration Revenues A Woe
Ionis' RNA antisense technology has allowed it to form partnerships with leading drugmakers for development/marketing of its drugs. However, the recent pipeline setbacks concern the Zacks Analyst.
Teladoc (TDOC) Gains From Buyouts, Rise in Telehealth Visit
Per the Zacks analyst, Teladoc's strategic acquisitions are enhancing distribution capabilities and service offerings. Also, a surge in telehealth visits is stimulating membership growth.
Acquisitions and Expansion Moves Aid Steel Dynamics (STLD)
Per the Zacks analysts, acquisitions will expand the company's product portfolio and shipping capabilities. Expansion actions should also add to its capacity and boost profitability.
Rise in Digital Subscribers to Lift NY Times' (NYT) Revenues
Per the Zacks analyst, The New York Times Company benefits from increase in digital subscribers. Management anticipates digital-only subscription revenues to rise 30-33% in fourth-quarter 2022.
Enerpac Tool (EPAC) Rides on Strength Across End Markets
The Zacks analyst is encouraged by the company's growth owing to strength across the oil & gas, wind and mining end-markets. The company's measures to reward its shareholders add to its appeal.
The Estee Lauder Companies' (EL) Margin Hurt by High Costs
Per the Zacks analyst, inflationary pressures are a concern for The Estee Lauder Companies gross margin. In the first quarter of fiscal 2023,, its gross margin contracted 190 basis points to 74%.
Slowdown in Housing Market & High Inflation Ail Lennar (LEN)
Per the Zacks analyst, rising mortgage rates and soaring inflation are hitting the affordability of prospective buyers, thereby impacting Lennar's orders and backlogs.
Rising Material Costs Hurt Louisiana-Pacific's (LPX) Margin
Per the Zacks analyst, rising material and transportation costs and discretionary investments, comprising siding mill conversions and sales and marketing costs are pressing concern for Louisiana-Pacic
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