Top Stock Reports for The Home Depot, Elevance Health & BP

Wednesday, October 26, 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 The Home Depot, Inc. (HD), Elevance Health Inc. (ELV) and BP p.l.c. (BP). 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 >>>

The Home Depot shares have underperformed the Zacks Building Products - Retail industry over the past year (-21.4% vs. -18.6%). The company reported soft gross margin in the fiscal second quarter driven by higher supply chain investments. Higher inventory levels and interest expense also remain concerning.

However, The Home Depot has reported its ninth straight quarter of earnings and sales beats in the fiscal second quarter. Results gained from strong demand for home-improvement projects, robust housing market trends and ongoing investments.

The company also benefited from continued strength in both Pro and DIY categories, as well as digital momentum. Its interconnected retail strategy and underlying technology infrastructure have helped consistently boost web traffic for the past few quarters, aiding digital sales.

(You can read the full research report on The Home Depot here >>>)

Shares of Elevance Health have outperformed the Zacks Medical Services industry over the past year (+20.1% vs. -36.4%). The company’s improving top-line can be attributed to premium rate increases and higher memberships. Acquisitions and collaborations have enabled the company to strengthen its business portfolio.

Its well-performing Medicare and Medicaid businesses, coupled with several contract wins, are expected to drive its membership going ahead. Adjusted net income is anticipated to be more than $28.95 per share, higher than the prior outlook of greater than $28.70.

However, the company's escalating costs continue to put pressure on margins. Declining cash flows are also concerning. Its balance sheet with a massive debt of more than $21 billion can affect financial flexibility. As such, the stock warrants a cautious stance.

(You can read the full research report on Elevance Health here >>>)

BP’s shares have gained +8.2% over the past year against the Zacks Oil and Gas - Integrated - International industry’s gain of +34.3%. The company has a strong portfolio of upstream projects, backing impressive production growth. The company boasted that the target of adding a net production of 900 thousand barrels of oil equivalent per day by 2021 from key projects has been met successfully.

BP has set an aggressive energy transition plan to capitalize on the mounting demand for clean energy. Currently, high oil prices are aiding the company’s upstream operations. Notably, BP announced plans to execute a $3.5-billion share buyback, which is expected to be completed before reporting the third-quarter results.

However, the company’s balance sheet is considerably more levered than most peers, thereby limiting its financial flexibility. Also, increasing costs and expenses has been adversely affecting the energy giant’s income. As such, the stock warrants a cautious stance.

(You can read the full research report on BP here >>>)

Other noteworthy reports we are featuring today include Citigroup Inc. (C), Gilead Sciences, Inc. (GILD), and ServiceNow, Inc. (NOW).

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

Focus on Pro Customers to Aid Home Depot's (HD) Top Line

Elevance Health (ELV) Strong on Top Line, Capital Position

BP to Benefit From Renewable Energy Project in Australia

Featured Reports

Citigroup (C) Progresses on Strategic Sales Amid Rising Costs
Per the Zacks analyst Citigroup's progress on the global consumer banking business exit will help focus on core operations. Yet revamping technology and risk management framework might elevate expense

Biktarvy Fuels Gilead (GILD) Amid Generic Competition
Per the Zacks analyst, strong performance from flagship HIV therapy Biktarvy and contribution from the oncology franchise boost Gilead as some other drugs face generic competition.

Growing Customer Base & Partnerships Aid ServiceNow (NOW)
Per the Zacks analyst, ServiceNow benefits from rising adoption of its workflows from companies undergoing digital transformation. Also, strategic alliances with the likes of Microsoft are a tailwind.

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.

Mobile & Internet Subscriber Gain Benefits Charter (CHTR)
Per the Zacks analyst, higher subscriber strength in residential and commercial internet services along with broadening Spectrum Mobile user base is driving Charter's top line.

Solid Product Suite Aids Ecolab (ECL) Amid Stiff Competition
The Zacks analyst is upbeat about Ecolab's robust product portfolio despite its operation in a tough competitive landscape.

Upbeat Air-Travel Demand Aids JetBlue (JBLU), High Costs Ail
Improved air-travel demand is driving Delta's top line. The Zacks analyst is, however, worried about escalated fuel costs that are limiting bottom-line growth.

New Upgrades

Marriott (MAR) Likely to Gain From Robust Expansion Efforts
The Zacks analyst believes that Marriott's efforts to expand its footprint and improving demand bode well. At the end of second-quarter 2022, Marriott's development pipeline totaled nearly 2942 hotels

Higher Nitrogen Demand and Prices Aid CF Industries (CF)
Per the Zacks analyst, CF Industries will gain from higher demand for nitrogen fertilizers in major markets. Higher nitrogen prices amid lower supply availability will also drive its margins.

RPM Banks on Construction & Industrial Maintenance Activity
Per the Zacks analyst, robust construction and industrial maintenance activity, a rebound in energy markets and focus on investments in the fastest-growing areas of the business are benefiting RPM.

New Downgrades

Soft Industrial Segment & Rising Costs Hurt Woodward (WWD)
Per the Zacks analyst, Woodward's performance is being affected by weakness in Industrial segment due to supply chain woes. Rising material and labor costs are added concerns.

Consumer Execution, Modernization Delay Hurts Mercury (MRCY)
Per the Zacks analyst, pandemic-related modernization delays and customer execution issues are likely to continue impacting Mercury Systems' organic revenue growth in the near-term.

Rising Mortgage Rates & Input Costs to Hurt PulteGroup (PHM)
Per the Zacks analyst, rising mortgage rates, material cost inflation and continued supply-chain issues have been impacting PulteGroup's profitability.

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Citigroup Inc. (C) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
The Home Depot, Inc. (HD) : Free Stock Analysis Report
 
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
 
Elevance Health, Inc. (ELV) : Free Stock Analysis Report
 
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