Thursday, May 5, 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 Oracle Corporation (ORCL), Union Pacific Corporation (UNP), and Ford Motor Company (F). 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 >>>
 

Oracle shares have done better than the broader Zacks Tech sector in the year-do-date period (-15.5% vs. -18.9%), but they have lagged the S&P 500 index (-15.5% vs. -9.8%), a function of sentiment shift on the sector in a rising interest rate environment. The Zacks analyst believes that higher spending on product enhancements, especially toward the cloud platform, amid increasing competition in the cloud domain is likely to limit margin expansion.

On the other hand, Oracle is benefiting from the ongoing momentum across its cloud business, driven by the strong uptake of Oracle Cloud Infrastructure services and Autonomous Database offerings. Solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bodes well.
 

Solid demand for the Oracle Dedicated Region Cloud@Customer is anticipated to drive the top line. Partnerships with Accenture and Microsoft is helping Oracle win new clientele. The company’s share buybacks and dividend policy are noteworthy.
 

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

Shares of Union Pacific have outperformed the Zacks Transportation – Rail industry over the past year (+4.4% vs. +0.7%). The Zacks analyst believes that Union Pacific's efforts to reward its shareholders even in the current uncertain scenario is praiseworthy. The company hiked dividend twice in 2021. The railroad operator is also active on the buyback front.
 

UNP returned $3.5 billion to its shareholders in first-quarter 2022. Management anticipates share repurchases in 2022 to be in line with the 2021 levels of $7.3 billion. The company's strong free cash flow generating ability supports its shareholder-friendly activities. Uptick in freight revenues (up 17% year over year in first-quarter 2022) as economic activities pick up the pace is an added positive.
 

However, escalation in fuel costs (up 74% in the March quarter) as oil prices move north induced a 16% rise in operating expenses. High debt/EBITDA ratio and tepid automotive demand are further concerns. High capex may also play spoilsport.
 

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

Shares of Ford Motor have outperformed the Zacks Automotive - Domestic industry over the past year (+27.6% vs. +3.9%). The Zacks analyst believes that strong vehicle mix supported by F-series trucks and SUV models, including Escape, Explorer, Expedition, EcoSport and Edge, among others is expected to bolster Ford’s revenues. The robust electric vehicle (EV) lineup—with Mustang Mach-E, E-Transit and F-150 Lightning— is receiving great reception and is set to drive growth.
 

Upbeat 2022 guidance also spark optimism. Ford+ plan, with a focus on profitability growth, e-mobility future and enhancement of customer experience augurs well. Yet, massive electrification spending of over $50 billion by 2026 is likely to strain near-term cash flows. High commodity and freight expenses, a tough labor market and logistical challenges will mar near-term profits.
 

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

Other noteworthy reports we are featuring today include Biogen Inc. (BIIB), PPG Industries, Inc. (PPG), and Expedia Group, Inc. (EXPE).
 

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>>>