Thursday, August 4, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the ongoing Q2 earnings season and new research reports on 16 major stocks, including Visa Inc. (V), Comcast Corporation (CMCSA), and Medtronic plc (MDT). 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 >>>
Q2 Earnings Season Scorecard
Including all the reports that came out the morning of August 4th, we now have Q2 results from 410 S&P 500 members or 82% of the index's total membership.
Total earnings for these companies are up +7.8% from the same period last year on +14.8% higher revenues, with 77.3% beating EPS estimates and 68.8% beating revenue estimates.
The proportion of these 410 index members beating both EPS and revenue estimates is 58.5%.
As we have been pointing out since the start of this reporting cycle, the EPS and revenue beats percentages are tracking towards the lower end of the historical range for this group of stocks.
That said, the market has found these results fairly reassuring, particularly given concerns about a Fed-driven economic slowdown or even a recession.
To that end, while some companies have guided lower, citing trends in consumer spending, FX headwinds or the pre-existing issues of inflationary and logistical challenges, the overall tone and substance of management guidance and commentary has been good enough.
Estimates for the second half of the year and next year have come down a bit, but the declines are nowhere near what would be consistent with a significant economic slowdown or recession.
Looking at Q2 as a whole, combining the actual results from the 410 index members that have reported with estimates for the still-to-come companies, earnings and revenues are on track to be up +6.3% and +13.7% from the year-earlier level, respectively.
The aggregate total of Q2 earnings for the index are on track to reach a new all-time quarterly record, surpassing the level reached in 2021 Q3.
Today's Featured Analyst Reports
Visa shares have modestly lagged Mastercard in the year-to-date period (-1.1% vs. -0.2%), but they have handily outperformed the S&P 500 index (down -13.1%) and the Zacks Finance sector (-12.9%). The company is undoubtedly faced with a number of near-term challenges, but the long-term outlook remains positive, as came through in the recent quarterly report.
Visa’s fiscal third-quarter earnings beat estimates. Its numerous buyouts and alliances paved the way for long-term growth and consistently drove its revenues. Constant investments in technology are solidifying its position in the payments market. A shift in payments to the digital mode is a boon.
The coronavirus vaccine rollouts and the gradual revival of consumer confidence will keep driving spending, expanding business volumes in turn. Backed by its strong cash position, it remains committed to boosting its shareholder value.
(You can read the full research report on Visa here >>>)
Comcast shares have declined -31.5% over the past year against the Zacks Cable Television industry’s decline of -35.0%, reflecting persistent trends in cord cutting and a leveraged balance sheet in a backdrop of tightening monetary policy. The second-quarter 2022 results reflected slowing broadband user base addition primarily due to reversal of pandemic trends and increased competition.
Nevertheless, the company benefited from a growing wireless subscriber base. Comcast’s plan to transition to DOCSIS 4.0 is noteworthy in this regard. The technology will help it in expanding much faster and at a lower cost compared to competitors.
Recovery in park and movie business bodes well for Comcast’s profitability. Its streaming service Peacock is a key catalyst in driving broadband sales. Strong free cash flow generation ability is noteworthy.
(You can read the full research report on Comcast here >>>)
Medtronic shares have outperformed the Zacks Medical - Products industry over the past 2 years (+0.9% vs. -38.4%) on the back of a succesful global expansion effort. Meanwhile, within Cardiovascular, the company is gaining market share, banking on recent product launches.
Within MedSurg, Medtronic is scaling its production of Hugo RAS. Innovations and market expansion efforts are helping it offset the impact of the high inflation and supply disruptions.
Medtronic’s strong liquidity position should allow it to meet its near-term debt obligations. All these factors support our bullish stance on the stock.
(You can read the full research report on Medtronic here >>>)
Other noteworthy reports we are featuring today include Lockheed Martin Corporation (LMT), ServiceNow, Inc. (NOW), and Chubb Limited (CB).
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
Visa (V) Rides on Improving Top Line & Financial Position
Wireless Subscriber Gain Drives Comcast's (CMCSA) Prospects
Medtronic (MDT) Market Share Grows, MedSurg Prospect Robust
Order Growth Boosts Lockheed (LMT), Tiff With Turkey Ails
Per the Zacks analyst, steady order flow continues to boost Lockheed's revenue growth. Yet, the U.S. government's tiff with Turkey over its involvement in Russia's S-400 may hurt F-35 program.
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.
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.
Dollar Tree's (DLTR) Real Estate Initiatives Hold Potential
Per the Zacks analyst, Dollar Tree is on track with optimizing its store portfolio through new store openings, renovations, re-banners and closings. Its new H2, Dollar Tree Plus and Combo Stores hold
Loan Growth Supports M&T Bank (MTB), Rising Costs a Woe
Per the Zacks analyst, M&T Bank's top line gets support from increasing loans and rising interest rates.
Sports Betting Aid Wynn Resorts (WYNN), Macau Woes Hurts
Per the Zacks analyst, Wynn Resorts is benefiting from robust demand for sports betting and expansion in domestic markets. However, coronavirus related restrictions in Macau hurts the company.
CRISPR Therapeutics' (CRSP) Pipeline Development Fuels Growth
While CRISPR Therapeutics' pipeline progress is impressive, the Zacks Analyst is concerned about a lack of stable stream of income as the company has no marketed drugs in its portfolio.
Chubb (CB) Continues to Gain From Strategic Acquisitions
Per the Zacks analyst, buyouts have helped Chubb in domestic as well as international expansion, boosted the portfolio of products and services and aided revenue growth.
Phillips 66 (PSX) to Gain From Higher Distillate Fuel Demand
Per the Zacks analyst, Phillips 66 is well-positioned to benefit from higher distillate fuel demand amid changes in the marine fuel sulfur limits.
Halliburton (HAL) to Benefit from North American Exposure
The Zacks analyst believes that Halliburton can take advantage of the tight fundamentals of the North American land drilling space through its market-leading pressure pumping operations.
Lower Current Ratio and Seasonality Bother Equifax (EFX)
The Zacks analyst is pessimistic about Equifax's revenue streams, affected by seasonality. Moreover, the decreasing current ratio (a measure of liquidity) is a headwind.
Supply Chain Related Headwinds to Weigh on Oshkosh (OSK)
Supply chain snafus and increasing inflationary pressure will mar Oshkosh's near-term prospects, per the Zacks analyst. To that end, the firm has also trimmed its fiscal 2022 EPS view.
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.
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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
Comcast Corporation (CMCSA) : Free Stock Analysis Report
Medtronic PLC (MDT) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
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