Today's Must Read
SONY to Gain from Brand Focus & Improving G&NS Segment Sales
Strength in North America to Drive Diageo's (DEO) Top Line
Thursday, June 16, 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 The Procter & Gamble Co. (PG), Sony Group Corp. (SONY), and Diageo plc (DEO). 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 >>>
Procter & Gamble shares have outperformed the Zacks Soap and Cleaning Materials industry over the past year (+1.6% vs. -7.9%). The company reported earnings surprise for more than three years, and revenues beat estimates for the eighth straight time in the quarter.
Results were driven by improved productivity amid cost headwinds, along with the rising demand for cleaning products. Gains from cost productivity also aided results. Management lifted its fiscal 2022 view.
It witnessed SG&A expense leverage, owing to savings from overhead and marketing expenses, and cost leverage gains due to higher sales and real estate. However, unfavorable mix, commodity cost inflation, increase in freight costs, product and packaging investments and other impacts hurt margins. It expects higher commodity and freight costs to persist in fiscal 2022.
Sony shares have declined -14.5% over the past year against the Zacks Audio Video Production industry’s decline of -16.1%. The company expects operating margin for the fiscal year to be likely affected by decline in Pictures and G&NS segment operating incomes.
A stiff rivalry and high costs pose as concerns. However, it remains focused on the premium segment of the branded products market to maximize growth. Its music experience, 360 Reality Audio, introduced to make listeners feel immersed in sound from all directions, bodes well.
Nevertheless, sales are expected to improve due to the higher G&NS and I&SS segments. The company is also benefiting from an increase in sales in the Music, Pictures, Imaging & Sensing Solutions and Financial Services units. Strategic acquisitions and joint ventures bode well in the long haul. The company now is working towards achieving carbon neutrality ten years earlier than prior targeted deadline of 2050.
Diageo shares have declined -10.9% over the past year against the Zacks Beverages - Alcohol industry’s decline of -13.7%. The company is witnessing continued inflationary pressures and currency headwinds which are concerning.
Moreover, margin growth was driven by supply productivity savings and price increases, which more than offset the higher cost inflation. It provided a decent view for fiscal 2022, with organic sales momentum likely to continue in the second half of fiscal 2022.
However, continued recovery in the on-trade channel, strong consumer demand in the off-trade and market share gains, which also aided the company’s first-half fiscal 2022 performance. The company witnessed sales, operating margin and earnings growth in first-half fiscal 2021 driven by organic sales growth across all regions. Strong recovery in gross margin and operating cost leverage along with higher marketing investments aided organic operating margin growth.
Other noteworthy reports we are featuring today include Toyota Motor Corp. (TM), Petroleo Brasileiro (PBR) and Intuitive Surgical, Inc. (ISRG).
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>>>