Friday, June 16, 2023

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 Toyota Motor Corporation (TM), Fomento Económico Mexicano, S.A.B. de C.V. (FMX) and United Parcel Service, Inc. (UPS). 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 >>>

Toyota Motor shares have outperformed the Zacks Automotive - Foreign industry over the past year (+7.4% vs. -10.1%) reflecting a still-favorable automobile demand environment and Toyota's robust product line-up, including in the EV space. 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 Motor’s commitment to return capital to shareholders and upbeat fiscal 2024 view spark confidence. However, commodity cost inflation is expected to weigh on gross margins. Supply-chain disruptions and tough labor market will play spoilsports.

Unfavorable foreign currency translations and high R&D expenses are also likely to limit profits. Also, elevated leverage of the firm may restrict its financial flexibility to tap onto growth opportunities. Thus, investors are advised to wait for a better entry point.

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

Shares of Fomento Económico Mexicano have outperformed the Zacks Beverages - Soft drinks industry over the past year (+64.5% vs. +21.0%). The company’s top and bottom-line improved year over year on strength across segments and improved operating income. Revenues improved on gains across all business units resulting from effective growth strategies and robust demand across markets.

Fomento Económico Mexicano’s digital initiatives and business expansion endeavors have also been aiding results. Its efforts to expand in the U.S. specialized distribution segment bodes well. The company displays strong financial flexibility.

However, FEMSA continued to witness operating margin decline due to contraction at Proximity, Health and Envoy Solutions divisions. Supply-chain disruptions and higher raw material costs hurt results.

(You can read the full research report on Formento Economico Mexicano here >>>)

United Parcel Service shares have modestly outperformed the Zacks Transportation - Air Freight and Cargo industry over the past year (+9.0% vs. +8.5%). The company’s is looking to drive growth in this uncertain scenario by improving efficiencies. Efforts to reward its shareholders through dividends and buybacks bode well for UPS.

United Parcel Service 's strong free cash flow generating ability pleases us and supports its shareholder-friendly activities. UPS anticipates making dividend payments of $5.4 billion apart from buying back shares worth $3 billion in 2023.

However, the new forecast is at the low end of the previous outlook and much lower than 2022's actual figure. The gloomy forecast is mainly due to weak consumer sales. Notably, average daily volume declined 5.4% in first-quarter 2023 at the U.S. Domestic package segment. The same declined 6.2% at the International Package division.

(You can read the full research report on United Parcel Service here >>>)

Other noteworthy reports we are featuring today include Caterpillar Inc. (CAT), ConocoPhillips (COP) and Union Pacific Corporation (UNP).

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>>>