Today's Must Read
Store Growth Aids Starbucks (SBUX), Dismal China Comps Hurts
Solid Momentum in Cloud Business Driving SAP's Performance
Tuesday, September 20, 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 Deere & Company (DE), Starbucks Corporation (SBUX) and SAP SE (SAP). 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 >>>
Deere & Company’s shares have outperformed the Zacks Manufacturing - Farm Equipment industry over the past year (+7.7% vs. +5.2%). The rally in commodity prices will continue to fuel agricultural equipment demand, encouraging farmers to boost spending on new farm equipment.
Replacement demand to upgrade old equipment will support Deere's top-line results in fiscal 2022. Demand for farm and construction equipment will continue to be supported by positive fundamentals, including favorable crop prices and increased infrastructure spending in fiscal 2022. Focus on investing in new products equipped with the latest technology will make farming automated, which will drive Deere's growth.
However, higher material and labor costs will dent margins while uncertainty related to the pandemic remians a concern. Deere’s earnings estimates for the fiscal 2022 have thus undergone downward revisions lately.
Starbucks shares have declined -17.9% over the past year against the Zacks Retail - Restaurants industry’s decline of -11.5%. The company’s performance continues to be negatively impacted by dismal China results, higher-than-expected inflationary pressures, increased costs and a tight labor market.
The company believes that performance will be under massive pressure for the rest of the year. The company has suspended guidance for the fourth quarter. However, on a year-over-year basis, earnings declined but revenues improved, given higher U.S. comparable sales.
Starbucks has been benefiting from operating fundamentals such as a solid global footprint, successful innovations and digital offerings. North America comps continue to impress investors.
SAP’s shares have declined -40.6% over the past year against the Zacks Computer - Software industry’s decline of -24.2% on the back of a challenging operating environment in Europe. The company lowered full-year operating profit guidance due to the €350-million negative impact from the war in Ukraine and expectations of a continued decline in software licenses revenue.
Stiff competition and increasing costs to enhance cloud-based offerings is likely to exert pressure on the company’s profitability in the near term. Nevertheless, SAP’s performance is gaining from continued strength in its cloud business, especially the new Rise with SAP solution.
Momentum in SAP’s Business Process Intelligence platform, particularly the S/4HANA solutions along with healthy traction witnessed in SuccessFactors Employee Central, Ariba and Fieldglass, Qualtrics and other cloud-based offerings is noteworthy. The company also announced an additional share buyback plan.
Other noteworthy reports we are featuring today include Mondelez International, Inc. (MDLZ), Airbnb, Inc. (ABNB), and Intuitive Surgical, Inc. (ISRG).
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>>>