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Top Analyst Reports for Home Depot, Diageo & Enbridge

Thursday, December 8, 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), Diageo plc (DEO) and Enbridge Inc. (ENB). 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 Home Depot have modestly lagged rival Lowe's (LOW) and the broader market this year (-22.9% vs. -20% for LOW and -18.7% for the S&P 500 index). The company reported soft gross margin in the fiscal third quarter driven by higher supply chain investments. Higher inventory levels and interest expense also remain concerning.

However, Home Depot reported 10th straight quarter of earnings and sales beat in the fiscal third quarter. Results also outpaced our estimate in Q3. It continues to gain from strong demand for home-improvement projects, robust housing market trends and ongoing investments.

It also witnessed continued strength in both Pro and DIY categories, and 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 Home Depot here >>>)

Shares of Diageo have underperformed the Zacks Beverages - Alcohol industry over the past year (-9.4% vs. -1.5%). The company is facing continued inflationary pressures and currency headwinds are concerning. However, recovery in the on-trade channel, strong consumer demand in the off-trade and market share gains aided Diageo’s fiscal 2022 results.

It witnessed sales, operating margin and earnings growth in driven by organic sales growth across all regions. Price/mix gained from a positive mix due to the robust growth in super-premium-plus brands, particularly scotch, tequila and Chinese white spirits.

DEO’s margin trends were favorable in fiscal 2022, thanks to the its premiumization efforts, recovery in markets, pricing actions and supply productivity savings, which mostly offset the cost inflation. It provided a decent view for fiscal 2023, with net sales growth expected across North America, Europe and Asia-Pacific.

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

Enbridge shares have gained +3.9% over the past year against the Zacks Oil and Gas - Production and Pipelines industry’s gain of +11.1%. The company has the longest and most sophisticated oil and liquids pipeline system in the world, which spreads across 17,809 miles. Hence, a significant portion of the midstream operator’s earnings is generated from transportation operations, driven by a string of long-term contracts.

Enbridge announced the increase of its annualized common share dividend to C$3.55 per share, thereby marking a dividend increase for 28 straight years. The company expects to put more than C$10 billion of growth projects into service in 2024 and beyond. This is expected to generate significant EBITDA growth in the coming years.

However, ENB has significant debt exposure since there has been a weakness in its operations. Also, Enbridge has mostly been yielding lower dividend than the industry over the past year.  As such, the stock warrants a cautious stance.

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

Other noteworthy reports we are featuring today include Marathon Petroleum Corporation (MPC), eBay Inc. (EBAY), and Laboratory Corporation of America Holdings (LH).

Sheraz Mian

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

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

Diageo's (DEO) Robust Pricing & Premiumization Aid Margins

Enbridge (ENB) to Gain From $8B Midstream Growth Projects

Featured Reports

Strength in Managed Payments Offerings Benefits eBay (EBAY)
Per the Zacks analyst, eBay is witnessing solid momentum among sellers on the back of its robust managed payments offerings.

LabCorp (LH) Gains from Innovation, Testing Demand Drop Ails
The Zacks analyst is impressed with LabCorp's continued spree of new product launches in high-growth areas. Yet, a major decrease in COVID-19 PCR and antibody testing sales is concerning.

Ryanair (RYAAY) Rides on Improved Traffic Amid Rising Costs
The Zacks Analyst is impressed with Ryanair's improved traffic growth, which implies increased passenger volume. High operating costs due to rising fuel expenses might hurt the bottom line.

Lamar (LAMR) to Ride the Growth Curve on Strategic Buyouts
Per the Zacks Analyst, Lamar's strategic acquisitions of outdoor advertising assets in its existing and new markets bodes well for growth. However, stiff competition from other forms of media is a woe

Improving Occupancy Aids Norwegian Cruise (NCLH), Costs High
Per the Zacks analyst, Norwegian Cruise is likely to benefit from improving occupancy, relaxation in COVID-related protocols and fleet expansion efforts. However, inflationary pressures pose concerns.

Prothena (PRTA) Candidates Promising, Competition a Concern
Per the Zacks analyst, Prothena's pipeline candidates promise potential and the pipeline progress has been encouraging. However, competition from bigwigs in targeted markets is stiff.

Semtech (SMTC) Rides on Growing Adoption of LoRa Solutions
Per the Zacks analyst, Semtech is benefiting from increasing demand for its LoRa devices and LoRaWAN standard owing to their various use cases in different industries.

New Upgrades

Marathon (MPC) Gains from Sale of Speedway Retail Unit
The Zacks analyst likes Marathon's sale of Speedway business, which provided a much-needed cash infusion and came with a supply agreement ensuring a steady revenue stream.

MRC Global (MRC) Rides on Strength in Gas Utility Sector
Per the Zacks analyst, MRC Global is poised to benefit from strength in its gas utilities sector due to distribution integrity upgrade programs and new home construction.

Signet's (SIG) Omni-Channel Initiatives Appear Encouraging
Per the Zacks analyst, Signet is integrating its physical stores with advanced virtual experiences through data-driven in-store consultations and services like buy online pickup in-store option.

New Downgrades

Rate Hikes & Subsidiary Dependence Ail Southwest Gas (SWX)
Per the Zacks analyst Southwest Gas's performance will get impacted as rising interest rates will surge borrowing cost. Lower than expected performance from subsidiaries could impact SWX's prospects.

Soft Product Shipment & Supply Chain Woes to Hurt Dolby (DLB)
Per the Zacks analyst, pandemic induced global supply chain troubles and higher product costs is a major concern for Dolby. Weakness in product shipment is an added concern

Lincoln National (LNC) Weak on High Costs, Mortality Claims
Per the Zacks Analyst, a high benefits expense level can dampen dent the company's margins. Continued incidence of COVID-related mortality remains a concern.

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

Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report

eBay Inc. (EBAY) : Free Stock Analysis Report

The Home Depot, Inc. (HD) : Free Stock Analysis Report

Enbridge Inc (ENB) : Free Stock Analysis Report

Diageo plc (DEO) : Free Stock Analysis Report

Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report

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Zacks Investment Research