Today's Must Read
Micron (MU) Benefits from Growing Memory-Chip Demand
CME Group (CME) Banks on Improving Top Line, Expenses Hurt
Thursday, December 30, 2021
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily, the last of 2021, features new research reports on 16 major stocks, including The Procter & Gamble Company (PG), Micron Technology, Inc. (MU), and CME Group Inc. (CME). 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 Procter & Gamble have outperformed the Zacks Soap and Cleaning Materials industry over the past year (+18.0% vs. +6.5%). Also, the company notched better-than-expected first-quarter fiscal 2022 results. The Zacks analyst believes that the company benefited from robust top-line growth across all segments driven by robust volume, pricing and mix. While it has reported an earnings surprise for more than three years, revenues beat estimates for the sixth straight time in first-quarter fiscal 2022.
However, unfavorable mix, commodity cost inflation, increase in freight costs and reinvestments and other impacts hurt the company’s margins, which weighed on the bottom line. It expects higher input and freight costs to persist in fiscal 2022.
Micron shares have gained +27.9% over the past year against the S&P 500’s gain of +28.4%. The Zacks analyst believes that Micron is witnessing growing demand for memory chips from cloud-computing providers and acceleration in 5G (fifth-generation) cellular network adoptions. Rising mix of high-value solutions, enhancement in customer engagement and improvement in cost structure are growth drivers as well. Further, 5G adoption beyond mobile is likely to spur demand for memory and storage, particularly in (Internet of Things) devices and wireless infrastructure.
However, Micron’s near-term profitability is likely to hurt by its planned salary hikes. Additionally, higher level of customer inventory in the cloud, graphics and enterprise market is a key threat. Soft server demand from several enterprise OEM (original equipment manufacturer) customers is also a concern.
CME Group’s shares have gained +25.8% over the past year against the Zacks Securities and Exchanges industry’s gain of +27.5%. The Zacks analyst believes that CME Group’s strong market position driven by varied derivative product lines bodes well. Efforts to expand and cross sell through strategic alliances, acquisitions, new product initiatives and a stable global presence bode well. Product innovation and growing proportion of volume from customers outside the United States have been aiding results.
However, escalating expenses due to higher technology cost are likely to put pressure on the company's margin expansion. Diversified product portfolio is significantly exposed to volatile interest rate, firm government regulations and limited credit availability in unstable capital and credit market. Also, stiff competition poses financial risk.
Other noteworthy reports we are featuring today include Valero Energy (VLO), PACCAR (PCAR) and America Movil (AMX).
Wishing our readers a wonderful New Year!
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>>>