Today's Must Read
Southern Company (SO) Buoyed by Regulated Customer Growth
Solid Demand Aids Northrop (NOC), Supply Chain Turmoil Woes
Wednesday, June 22, 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 Adobe Inc. (ADBE), The Southern Company (SO), and Northrop Grumman Corporation (NOC). 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 >>>
Adobe shares have declined -37.0% over the past year against Zacks Computer - Software industry’s decline of -12.9%, reflecting the company's significant European exposure on the back of the ongoing Ukraine-centric uncertainty. That said, the company’s Creative Cloud, Document Cloud and Adobe Experience Cloud products drove the top-line growth. Further, rising subscription revenues and solid momentum across the mobile apps remained major positives.
Growth in emerging markets, robust online video creation demand and solid adoption of Acrobat are tailwinds. Also, continued key customer wins of the company are contributing well. We remain optimistic about Adobe’s market position, compelling product lines, continued innovation, strategic acquisitions and solid adoption of cloud applications.
Southern Company shares have outperformed the Zacks Utility - Electric Power industry over the past year (+14.5% vs. +3.1%). This reflects the company's ability to steadily grow its customer base on the back of healthy population and job growth in its operating region. With good rate base growth and constructive regulation, the power supplier is expected to generate steady earnings and dividend growth in the coming years.
However, its elevated leverage, along with continued timing and cost overrun issues over its Vogtle project, are major overhangs. While the electric utility holding company’s debt-to-capitalization of 60.8% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. Therefore, the company warrants a cautious stance from the investors.
Northrop Grumman shares have outperformed the Zacks Aerospace - Defense industry over the past year (+25.5% vs. -41.6%). The company continues to witness strong demand for its products, driven by programs like F-35, Triton and SABR radar Global Hawk and E-2D program. Solid U.S. budgetary provisions make us confident about a solid inflow of contracts from Pentagon for Northrop. The company also holds a strong solvency position, at least in the short term. Northrop’s management remains confident about the company generating steady organic growth in 2022 and beyond.
However, a comparative analysis of the stock’s trailing 12-month EV/Sales ratio reflects a relatively gloomy picture that might be a cause of concern. The company fears that the continued spread of COVID-19 might cause extended disruption in its supply chain. Rising inflation across the United States may also hurt the stock.
(You can read the full research report on Northrop here >>>)
Other noteworthy reports we are featuring today include Boston Scientific Corporation (BSX), Marathon Petroleum Corporation (MPC) and Archer-Daniels-Midland Company (ADM).
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>>>