Tuesday, November 5, 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 Walmart Inc. (WMT), The Southern Company (SO) and Intercontinental Exchange, Inc. (ICE), as well as a micro-cap stock IDT Corp. (IDT). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.
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 >>>
Walmart’s shares have outperformed the Zacks Retail - Supermarkets industry over the past year (+52% vs. +50%). The company is benefiting from its diverse business model that spans multiple segments, channels and formats. The company's strong omnichannel strategy has boosted traffic across both physical stores and digital platforms.
Its emphasis on improving delivery services has been successful, contributing to steady grocery market-share gains. Upsides like these, along with growth in the advertising business, have fueled second-quarter fiscal 2025 results, wherein the top and bottom lines grew year over year, and e-commerce sales surged.
However, the retail landscape remains dynamic due to challenges like inflation and volatile consumer spending. High operating costs are also a concern. While Walmart raised its fiscal 2025 view, its modest growth targets for the third quarter reflect a cautious approach.
(You can read the full research report on Walmart here >>>)
Shares of Southern Co. have outperformed the Zacks Utility - Electric Power industry over the past year (+32.2% vs. +22.9%). The company is leveraging the demographics of its operating territories -- as in healthy population and job growth -- and it has gradually increased its customer base.
With good rate-base growth, constructive regulation and with the power supplier’s recent success in bringing the Vogtle nuclear project online, Southern is expected to generate steady earnings and dividend growth going forward.
However, the utility’s high leverage restricts financial flexibility, while an increased focus on nuclear energy could face opposition amidst growing environmental concerns. As it is, the utility sector remains sensitive to interest rate fluctuations and market sentiment. Therefore, Southern Company warrants a cautious stance from the investors.
(You can read the full research report on Southern Company here >>>)
Intercontinental Exchange’s shares have outperformed the Zacks Securities and Exchanges industry over the past year (+45.2% vs. +26%). The company’s top line benefits from its compelling product and service portfolio, the broad range of risk management services and strength in global data services. Continued strength in its energy franchise and improving recurring market data revenues are likely to keep growth on track.
Strategic buyouts help it achieve cost synergies that are in sync with its aim of generating long-term value for shareholders. It is well-poised for growth due to accelerated digitization in the U.S. residential mortgage industry. Intercontinental Exchange also engages in the effective deployment of capital.
However, expenses are likely to remain high in the near term. Foreign currency fluctuations and stricter regulations raise concerns. High interest expenses and high leverage pose risk.
(You can read the full research report on Intercontinental Exchange here >>>)
Shares of IDT have outperformed the Zacks Diversified Communication Services industry over the past year (+61.4% vs. +2.6%). This microcap company with market capitalization of $1.17 billion has growth strategy centers on high-growth segments like NRS, BOSS Money, and net2phone, which are expanding in digital payments, international remittances, and cloud communications.
NRS achieved 42% fourth-quarter fiscal 2024 revenue growth, while BOSS Money saw a 41% transaction volume increase in fiscal 2024 and generated positive EBITDA. IDT's cost controls boosted profitability, with a 12.7% fiscal fourth-quarter gross profit increase. Positioned in digital and cashless payment trends, IDT leverages BOSS Money and NRS's strong merchant network, though competition and regulatory compliance pressures may impact profitability.
The legacy communications segment's decline and fintech competition pose challenges for sustaining revenue growth. Other challenges include regulatory pressures, currency volatility and scaling investments.
(You can read the full research report on IDT here >>>)
Other noteworthy reports we are featuring today KLA Corp. (KLAC), Enbridge Inc. (ENB) and Colgate-Palmolive Co. (CL).
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
Walmart (WMT) Benefits from Impressive E-Commerce Operations
Southern Company (SO) Buoyed by Regulated Customer Growth
Intercontinental (ICE) Banks on Acquisitions Amid High Costs
Featured Reports
KLA (KLAC) Rides on Strong Wafer Inspection Business
Per the Zacks analyst, KLA is benefiting from the higher volume of wafer manufacturing, more complex designs, larger die and chip size driven by strong AI adoption.
Long-Term Take-or-Pay Contracts to Benefit Enbridge (ENB)
Enbridge's long-term take-or-pay contracts provide stable cash flows, minimizing exposure to commodity price fluctuations. However, its significant debt load concerns the Zacks analyst.
Colgate's (CL) Pricing & Productivity Initiatives Bode Well
Per the Zacks analyst, Colgate has been gaining from strong pricing, and funding-the-growth and other productivity initiatives. Such efforts have been bolstering the company's margins for a while.
Yak Acquisition Benefits United Rentals (URI), High Costs Ail
Per the Zacks analyst, solid demand trends across end markets and benefits from the Yak acquisition bode well for United Rentals. However, inflated costs and expenses are concerning.
Sustained CAG Growth Aids Illumina (ILMN) Amid Macro Issues
The Zacks analyst is impressed with Illumina's strong CAG business growth globally. Yet, challenges in terms of unfavorable foreign exchange and other broader macroeconomic issues hurt growth.
Waters (WAT) Prospects Rides on Strong Pharma Demand Growth
Per the Zacks analyst, Waters benefits from growth in its top global pharma accounts, with strong demand across Asia and Europe.
Strategic Investments, Acquisitions Aid California Water (CWT)
Per the Zacks analyst, California Water's infrastructure investments should help it provide reliable services. It gains from the expansion of operations through acquisitions and organic activities.
New Upgrades
High Rates, Fee Income, Acquisitions Aid State Street (STT)
Per the Zacks analyst, relatively higher interest rates, business servicing wins, strategic acquisitions, a solid balance sheet position and global footprint will keep aiding State Street.
Enterprise Visibility Unit Aids Zebra Technologies (ZBRA)
Per the Zacks analyst, Zebra Technologies' Enterprise Visibility and Mobility unit is benefiting from solid demand for mobile computing products, data capture solutions and services and software.
Amarin (AMRN) Rides on Robust Vascepa Sales Performance in EU
Per the Zacks analyst, label expansion of Amarin's sole marketed drug, Vascepa, in European markets is driving the top line. The recent restructuring plan to streamline operations also holds promise.
New Downgrades
Weak Global Vehicle Production to Hurt Aptiv (APTV)
Per the Zacks analyst, weak global vehicle production due to geopolitical tensions, weak momentum for electric cars, and worldwide semiconductor shortage are expected to impact Aptiv's business.
Shipping Volume-Related Woes Hurt FedEx's (FDX) Prospects
The Zacks analyst is concerned that shipping volume-related weakness is hurting the company's performance. Reduced demand for priority services is a major concern.
Macroeconomic Woes Dent Qorvo's (QRVO) Revenue Growth.
Per the Zacks Analyst, lower net sales due to macroeconomic headwinds affect Qorvo's (QRVO) top-line growth. Fierce competition remains a concern.
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Southern Company (The) (SO) : Free Stock Analysis Report
Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
KLA Corporation (KLAC) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
Enbridge Inc (ENB) : Free Stock Analysis Report
IDT Corporation (IDT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
