Tuesday, November 29, 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 Procter & Gamble Company (PG), The Coca-Cola Company (KO) and The Progressive (PGR). 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 Procter & Gamble have outperformed the Zacks Soap and Cleaning Materials industry over the past year (-1.6% vs. -3.1%) as well as the S&P 500 index (-1.6% vs. -16.4%). This performance momentum has been underpinned by a history of outperformance, with the recent strong Q3 report the 10th straight quarter of better-than-expected top and bottom line results. Sales improved year over year driven by robust pricing and a favorable mix, along with strength across segments.
Improved productivity amid cost headwinds has also aided the results. It witnessed SG&A expense leverage, owing to savings from overhead and marketing expenses, and cost leverage gains due to higher sales and real estate.
However, commodity cost inflation, increase in freight costs, product and packaging investments and other impacts hurt margins. Also, it issued a drab fiscal 2023 view due to inflation, higher freight and currency woes.
(You can read the full research report on Procter & Gamble here >>>)
Coca-Cola shares have gained +14.9% over the past year, modestly outperforming Pepsi at +12% and doing significantly better than the S&P 500 index at -16.4%. Its top and bottom lines surpassed estimates for the seventh straight quarter in Q3. The company’s results benefited from the continued momentum from the first half of 2022. Sales gained from revenue growth across its operating segments, aided by an improved price/mix and an increase in concentrate sales.
Coca-Cola benefited from underlying share gains in both at-home and away-from-home channels. It raised the organic revenues and comparable earnings per share growth guidance for 2022. It is poised to gain from innovations and accelerating digital investments.
However, pressures from higher supply chain costs, including transportation and input costs remain. Higher marketing spends and currency headwinds are also concerning.
(You can read the full research report on Coca-Cola here >>>)
Shares of Progressive have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+39.9% vs. +13.9%). The company continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses.
Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for the company's growth. Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.
However, exposure to catastrophe losses induces underwriting volatility. Escalating expenses due to higher losses and settlement expenses remain an overhang on the company's margin. High debt level along with low times earned interest pose financial risk.
(You can read the full research report on Progressive here >>>)
Other noteworthy reports we are featuring today include Zoetis (ZTS), Palo Alto Networks (PANW), and TC Energy (TRP).
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
P&G's (PG) Productivity & Cost Savings Plan to Aid Margins
Coca-Cola's (KO) Digital Investments to Aid the Top Line
Progressive (PGR) Gains on Premiums, Cat Loss Woes Linger
Dermatology, Parasiticides Fuel Zoetis (ZTS), Poultry Weak
Per the Zacks analyst, Zoetis companion animal business driven by Apoquel and Simparica maintains growth amid challenges for poultry products. The launch of innovative products should fuel growth.
Palo Alto (PANW) Rides on Product Strength, Marketing Effort
Per the Zacks analyst, Palo Alto Networks is gaining from solid contributions of its growth-oriented products including Strata, Prisma and Cortex. Increasing marketing efforts are also positive.
TC Energy's (TRP) C$34B Growth Projects to Boost Earnings
The Zacks analyst believes that TC Energy's C$34 billion of growth projects should support its earnings and dividend payouts but is worried over the massive debt of C$40.9 billion.
FUJIFILM (FUJIY) To Benefit From Strong Product Portfolio
Per the Zacks analyst, FUJIFILM's performance benefitted from strong revenue growth across all business segments. However, increasing cost and high debt remain concerns.
Wise Asset Selection Aids Annaly (NLY) Amid BVPS Decline
Per the Zacks Analyst, timely capital rotation in the investment portfolio will drive better returns for Annaly. Yet mortgage market volatility and interest-rate volatility might hinder the book value
HydroChemPSC Buyout Aids Clean Harbors (CLH), Liquidity Low
Per the Zacks analyst, HydroChemPSC acquisition will generate multiple cross-selling opportunities for Clean Harbors. However, decreasing current ratio is worrisome.
Expansion in Geothermal Energy Market Aids Ormat (ORA)
Per the Zacks Analyst, Ormat's strategic investment plan to expand in the geothermal energy market should strengthen the company's position in the global geothermal energy market.
Fortinet (FTNT) Rides on Product Strength, Marketing Efforts
Per the Zacks analyst, Fortinet is gaining from solid contributions of its growth-oriented products Security Fabric, cloud and SD-WAN. Increasing marketing efforts are also a positive.
Buyouts & Software Capabilities Aid CNH Industrial (CNHI)
The Sampierana and Raven buyouts aid growth in CNH Industrial's agriculture and construction equipment portfolios. Also, per the Zacks analyst, its focus on AI initiatives boosts software development.
Robust Demand For Online Betting Aid Boyd Gaming (BYD)
Per the Zacks analyst, Boyd Gaming is likely to benefit from its efforts to expand online betting offerings. Going forward, the company is optimistic about online gaming prospects in Ohio.
Lack of Hedge Protection Set to Mar Cenovus' (CVE) Margin
Per the Zacks analyst, Cenovus' lack of any hedge protection exposes it to potential weakness in crude prices more than some peers. Rising expenses for purchased products are also concerning.
Higher Raw Material Costs, Weak Demand Ail Dow (DOW)
Per the Zacks analyst,higher raw material and energy costs will exert pressure on the company's margins. It also faces headwinds from weaker demand in Europe due to lower consumer spending.
Lower Transactions Amid Rate Hikes to Hurt Jones Lang (JLL)
Per the Zacks analyst, rising interest rates and adverse foreign currency movements are likely to impact Jones Lang LaSalle's transaction-based businesses in the near term.
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