Today's Must Read
Solid Insurance Business Aid Berkshire (BRK.B), Cat Loss Ail
S&P Global (SPGI) Benefits From Acquisitions Amid High Debt
Thursday, May 19, 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 Apple Inc. (AAPL), Berkshire Hathaway Inc. (BRK.B), and S&P Global Inc. (SPGI). 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 >>>
Apple shares are down -18% in the year-to-date period, modestly underperforming the broader market's -16.2% decline, but they have held up better than the Zacks Tech sector's -26.7% pullback. While overall sentiment on the entire space remains negative, Apple remains well positioned given momentum in the services and robust performance from iPhone, Mac, Wearables and an expanding App Store ecosystem. The availability of new Mac Studio and new iPad Air is expected to drive top-line growth. Apple TV+ is gaining recognition due to award-winning shows. This bodes well for the Services segment.
However, Apple did not provide revenue guidance for the third quarter of fiscal 2022. Apple expects COVID-induced supply chain disruptions and industry-wide silicon shortages to hurt the top line by $4-$8 billion. Unfavorable forex conditions along with the absence of Russian revenues are also expected to hurt the top line.
(You can read the full research report on Apple here >>>)
Shares of Berkshire Hathaway have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+6.5% vs. -0.9%). The company is one of the largest property and casualty insurance companies measured by premium volume. Berkshire's inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts and indicates the company's financial flexibility.
Continued insurance business growth fuels increases in float, drive earnings, and generates maximum return on equity. The non-insurance businesses are delivering improved results with increased revenues over the past few years. A sturdy capital level provides the further impetus. However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of Berkshire. Huge capital expenditure remains a headwind for the company.
(You can read the full research report on Berkshire Hathaway here >>>)
S&P Global shares have declined -11.5% over the past year against the Zacks Business - Information Services industry’s decline of -13.6%. The company remains vulnerable to proceedings, investigations, and inquiries with respect to the ratings provided, leading to legal charges, damages, or fines. Growth initiatives, higher compensations, and incentives raise the company's expenses. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations. Partly due to these headwinds, the stock has declined in the past year.
However, The Zacks analyst believes that S&P Global remains well poised to gain from the growing demand for business information services. Buyouts help innovate, increase differentiated content and develop new products. Effective management execution has helped it generate solid cash flow which is utilized for growth initiatives. Dividend payments and share buybacks boost investor’s confidence and positively impact earnings per share.
(You can read the full research report on S&P Global here >>>)
Other noteworthy reports we are featuring today include Comcast Corporation (CMCSA), GlaxoSmithKline plc (GSK), and Cigna Corporation (CI).
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>>>