Monday, April 17, 2023

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q1 earnings season, in addition to new research reports on 16 major stocks, including NIKE, Inc. (NKE), Toyota Motor Corporation (TM) and ConocoPhillips (COP). 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 >>>
 

Q1 Earnings Season Scorecard

Including this morning's releases, we now hve Q1 results from 33 S&P 500 members. Total earnings for these 33 index members are up +7.7% from the same period last year on +10.1% higher revenues, with 81.8% beating EPS estimates and 69.7% beating revenue estimates.

On the earnings front, this is a better showing from this group of 33 index members than we have seen from the group in the last three reporting cycles, in terms of growth as well as the beats percentages.

With respect to revenues, the growth pace for this group of 33 index members is better than what we saw in the preceding period while the beats percentage is in-line with what we saw from the group in the 2022 Q4 reporting cycle.

Looking at Q1 as a whole, combining the actual results that have come out with estimates for the still-to-companies, total earnings are expected to be down -9.5% from the same period last year on +1.8% higher revenues. For a detailed look at the Q1 earnings season, please check out our weekly Earnings Preview report >>>>Analyzing Q1 Bank Earnings: Good or Bad?

Today's Featured Analyst Reports

NIKE shares have outperformed the Zacks Shoes and Retail Apparel industry over the past six months (+41.3% vs. +38.7%). The company gained from the Consumer Direct Acceleration strategy, compelling product innovation and solid online show. NIKE witnessed double-digit revenue growth across North America, EMEA and APLA.

For fiscal 2023, it expects revenue growth in the high-single digits, up from the prior mentioned mid-single-digit growth and in line with our estimate of 8.6% growth.

However, NIKE witnessed decline in gross margin due to higher markdowns, increased freight and logistics costs, elevated input costs and currency headwinds. Also, elevated SG&A expenses are concerning.

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

Shares of Toyota Motor have gained +1.3% over the past six months against the Zacks Automotive - Foreign industry’s gain of +8.8%. The continued demand for vehicles and robust product lineup are set to fuel sales volumes of Toyota. The Zacks analyst expect total vehicle sales to increase around 7% year over year in fiscal 2023 to 8.8 million units.

To capitalize on the accelerated global shift to green cars, the auto giant is deepening focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness. Toyota is also committed to returning capital to shareholders via buybacks and dividends, which sparks confidence.

However, commodity cost inflation is expected to weigh on gross margins. Unfavorable foreign currency translations and high R&D expenses are also likely to limit profits. We expect net income in fiscal 2023 to decline 18.6% year over year. Thus, investors are advised to wait for a better entry point.

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

Shares of ConocoPhillips have outperformed the Zacks Oil and Gas - Integrated - United States industry over the past year (+10.3% vs. +6.7%). The company holds a bulk of acres in the unconventional plays of Eagle Ford shale, Permian Basin and Bakken shale. Significant opportunities are there for the company in the Bakken Shale, where it owns about 750 undrilled locations that could provide access to huge reserves.

ConocoPhillips projects its 2023 production at 1.76-1.8 MMBoe/d, suggesting an increase from 1.74 MMBoe/d last year. COP’s balance sheet is significantly less leveraged than the industry it belongs to. Additionally, the company announced its 2023 planned return of capital to shareholders of $11 billion.

However, ConocoPhillips is highly exposed to oil price fluctuations, which makes things challenging for the company. Also, the company been generating lower dividend yield than the industry for the past few years. As such, the stock warrants a cautious stance.

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

Other noteworthy reports we are featuring today include Automatic Data Processing, Inc. (ADP), PayPal Holdings, Inc. (PYPL) and Zoetis Inc. (ZTS).

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>>>