Today's Must Read
Chevron (CVX) to Gain from Massive Permian Acreage
Electrification Drive Aids Toyota Motor (TM) Amid Inflation
Wednesday, August 3, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time scorecard of the ongoing Q2 earnings season and new research reports on 16 major stocks, including Apple Inc. (AAPL), Chevron Corporation (CVX), and Toyota Motor Corporation (TM). 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 >>>
Q2 Earnings Season Scorecard
Including all of this morning's reports, we now have Q2 results from 357 S&P 500 members or 71.4% of the index's total membership. Total earnings for these 357 index members are up +7.3% from the same period last year on +14.7% higher revenues, with 77.3% beating EPS estimates and 66.7% beating revenue estimates.
The proportion of these companies beating consensus EPS and revenue estimates still remains towards the lower end of the high-low range over the last 5 years for this group of companies.
The earnings growth of +7.3% for Q2 has been dragged down by lower growth for the Finance sector and boosted by the Energy sector results.
Excluding the Finance sector drag, Q2 earnings growth for the remainder of the index would be up +16.5%. The Q2 earnings growth pace turns negative on an ex-Energy basis (down -4%).
Looking at Q2 as a whole, combining the actuals from the 357 companies that have reported with estimates for the still-to-come companies, total earnings are on track to increase +6.3% on +13.2% higher revenues. The growth pace improves to +14% excluding the Finance sector and drops to a decline of -4.1% on an ex-Energy basis.
Today's Featured Analyst Reports
Apple shares have more than held their own in this year's uneven market, with the stock outperforming the S&P 500 -6.4% vs. -14.5% in the year-to-date period. The company’s third-quarter fiscal 2022 results have helped sustain this momentum, with the numbers benefiting from strong iPhone sales and continued momentum in the Services business.
The segment benefited from the robust performance of Apple TV+ partially offset by unfavorable forex, the absence of revenues from Russia and the challenging macroeconomic environment. However, iPad sales were hurt by supply-chain constraints. Apple did not provide revenue guidance for the fourth quarter of fiscal 2022.
Apple expects year-over-year revenue growth to accelerate during the fiscal fourth quarter on a sequential basis, despite the unfavorable year-over-year impact from forex. Services revenue growth is expected to be lower than the June quarter due to challenging macroeconomic conditions and unfavorable forex.
Chevron shares are down from their high in early June, but are still up +32.3% this year, outperforming the Zacks Energy sector's +22.9% gain. The company is considered one of the best-placed global integrated oil firms to achieve sustainable production ramp-up.
America’s No. 2 energy company’s existing project pipeline is among the best in the industry, thanks to its premier position in the lucrative Permian Basin. However, Chevron was not immune to the commodity price crash of 2020, forcing it to cut spending substantially.
The company’s high oil price sensitivity is a concern too. Moreover, the supermajor’s 10-year reserve replacement ratio of 100% is indicative of its inability to replace the amount of oil and gas produced. Finally, Chevron has been a laggard to jump into the net-zero bandwagon.
Toyota Motor shares have declined -11.8% this year, outperforming the Zacks Auto sector's -20.9% decline. The stock has also held up better than Ford (down -24.2%) and GM (-35.9%) in the year-to-date period. While the company is faced with a host of near-term challenges, ranging from the chip crunch and logistical challenges, the scale and scope of its operations enable it to deal with these challenges better than its competitors.
Also, Toyota’s electrification push including investment in BEVs, hybrids, batteries and fuel-cell vehicles is set to bolster prospects. It aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030.
The Japanese auto giant forecasts a year-over-year growth in sales volume and revenues for the current fiscal year. The expanding portfolio of product lines, a robust lineup of trucks and SUVs, partnerships with Hino and Subaru and Mazda will steer long-term growth.
Other noteworthy reports we are featuring today include Exxon Mobil Corporation (XOM), ConocoPhillips (COP), and Chipotle Mexican Grill, Inc. (CMG).
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>>>