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Top Stock Reports for PepsiCo, Canadian Pacific Kansas City & MercadoLibre

Friday, April 12, 2024

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 PepsiCo, Inc. (PEP), Canadian Pacific Kansas City Limited (CP) and MercadoLibre, Inc. (MELI). 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 >>>

Shares of PepsiCo have underperformed the Zacks Beverages - Soft drinks industry over the past year (-6.0% vs. -3.9%). The company witnessed soft volume trends across both businesses, which impacted reported revenues in the fourth quarter. Adverse currency rates also remain headwinds.

Nevertheless, PepsiCo banks on strength and resilience in its categories, diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems and robust consumer demand trends. These factors along with robust pricing aided PepsiCo’s earnings and organic revenues fourth-quarter 2023.

The company witnessed organic revenue growth across the global beverage and convenient food businesses. Additionally, the company’s productivity and cost-management initiatives bode well. For 2024, PEP expects to deliver organic revenues revenue growth of at least 4%.

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

Canadian Pacific Kansas City shares have outperformed the Zacks Transportation - Rail industry over the year-to-date period (+9.4% vs. +3.3%). Following the approval of the merger with Kansas City Southern, the company is known as Canadian Pacific Kansas City Limited. The deal is anticipated to draw synergies (annually) of $1 billion within three years.

The merged entity has started to offer a daily premium intermodal service between the U.S. Midwest and Mexico. The Zacks analyst is impressed with Canadian Pacific Kansas City's efforts to reward its shareholders through dividends and share repurchases. On the flip side, high operating expenses continue to weigh on the company's bottom line. Elevated fuel costs are leading to increased operating expenses.

Even though fuel prices have come down from the highs witnessed earlier, the same remains at an elevated level. High debt levels are worrisome as well. Canadian Pacific Kansas City does not have enough cash to meet its current debt levels.

(You can read the full research report on Canadian Pacific Kansas City here >>>)

Shares of MercadoLibre have underperformed the Zacks Internet - Commerce industry over the year-to-date basis (-4.3% vs. +14.1%). The company’s mounting expenses related to warehousing and mPOS discounts is a major headwind. Rising e-commerce competition from players like Amazon & Rakuten remains a concern.

Nevertheles, MercadoLibre is benefiting from accelerating commerce and fintech revenues. Rising gross merchandise volume (GMV) is acting as a key catalyst. Strong momentum across the company's advertising services is a major positive. Strengthening shipment growth is also contributing well to its top-line growth.

Increasing total payment volume (TPV), courtesy of the robust Mercado Pago, is another positive. Growing momentum across the MELI+ loyalty program and its expanding credit card offerings are acting as tailwinds. Solid uptake of online-to-offline offerings is a plus.


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

Other noteworthy reports we are featuring today include Hess Corporation (HES), Lululemon Athletica Inc. (LULU), and Manulife Financial Corporation (MFC).

Director of Research

Sheraz Mian

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

PepsiCo's (PEP) Business Investments to Bolster Performance

Canadian Pacific KC (CP) Rides on Dividends Amid High Costs

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MercadoLibre (MELI) Gains From Total Payment Volume Growth

Featured Reports

Hess (HES) to Benefit From Discoveries At Stabroek Block
Per the Zacks analysts, Hess' world-class oil findings in the Stabroek Block are set to elevate its recoverable resource estimates. Yet, its massive decline in the free cash flow is concerning.

lululemon (LULU) Tracks Well with E-commerce Expansion Plans
Per the Zacks analyst, lululemon is heavily investing in e-commerce capabilities like developing sites, transactional omni functionality and fulfilment options to capture the growing online demand.

Manulife Financial (MFC) Banks on Buyout, Expenses A Concern
Per the Zacks analyst, acquisitions have helped Manulife to increase scale to its core business lines and strengthen its presence in markets. However, higher expenses weigh on margins.

Royal Caribbean's (RCL) Solid Booking Trends Boost Revenues
The Zacks analyst believes that strong bookings, capacity growth, higher passenger ticket as well as onboard and other revenues bode well for Royal Caribbean.

Charles River (CRL) Thrives on RMS Prospects, FX Woes Worry
The Zacks analyst is impressed that Charles Rivers' RMS business is set to notably drive 2024 revenue growth, particularly with its key growth catalyst, CRADL. Yet, adverse FX effects are a concern.

Onto Innovation (ONTO) Gains from Uptake of Dragonfly System
Per the Zacks analyst, Onto Innovation is gaining higher demand for the Dragonfly inspection system. However, softness in advanced nodes business and lower services parts revenues is a concern.

Crysvita & Dojolvi Drive Ultragenyx (RARE), Low Cash a Woe
Per the Zacks Analyst, Ultragenyx's marketed products have been witnessing strong growth year-over-year. However, the shortage of funds for the company prevails, which is of significant concern.

New Upgrades

Aggregate-Led Business, Strategic Moves Benefit Vulcan (VMC)
Per the Zacks analyst, Vulcan aids from strategic execution, the strong performance of the aggregate-led business, large industrial projects demand and the improving single-family residential market.

Northern Trust (NTRS) Rides on Loan Growth & Solid Liquidity
Per Zacks analysts, Northern Trust is set to benefit from its loan growth and efforts to manage cost efficiently. Also, its solid liquidity position is set to aid its capital distribution activities.

Strategic Buyouts & Partnerships to Benefit Allison (ALSN)
Per the Zacks analyst, the buyout of AVTEC's Off-Highway transmission portfolio positions Allison for growth in the Indian market. Partnership with the U.S. Department of Defense also augurs well.

New Downgrades

Shortage of Labor, Rising Fuel Costs Ail Triumph Group (TGI)
Per the Zacks analyst, the shortage of labor, especially skilled labor poses huge threat on Triumph Group's performance. Also, high fuel prices lead to lower jet orders and thereby impact operations.

Weak Asset Quality, CRE Exposure, Debt Hurt BankUnited (BKU)
Per the Zacks analyst, poor asset quality, huge exposure to CRE and residential loans and high debt levels are major headwinds for BankUnited. Mounting operating expenses is a cause of concern too.

Stiff Competition, Customer Dependency Impairs Catalent (CTLT)
The Zacks analyst is worried about Catalent's operation in a competitive market. Its dependence on its customers' spending on production of biotechnology products is an added issue.

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

Hess Corporation (HES) : Free Stock Analysis Report

PepsiCo, Inc. (PEP) : Free Stock Analysis Report

Manulife Financial Corp (MFC) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

Canadian Pacific Kansas City Limited (CP) : Free Stock Analysis Report

MercadoLibre, Inc. (MELI) : Free Stock Analysis Report

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Zacks Investment Research