Tuesday, November 8, 2022

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q3 earnings season and new research reports on 16 major stocks, including JPMorgan Chase & Co. (JPM), Canadian Pacific Railway Limited (CP) and Equinix, Inc. (EQIX). 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 >>>

Q3 Earnings Season Scorecard

Including all of this morning's results, we now have Q3 earnings reports from 446 S&P 500 members or 89.2% of the index's total membership.

Total earnings for these 446 companies are up +2.3% from the same period last year on +12.6% higher revenues, with 70% beating EPS estimates and 68.2% beating revenue estimates.

The EPS and revenue beats percentages for these 446 index members is below what we had seen from the same group of companies in the last two years and below the 5-year averages, but otherwise within the historical range.

Estimates for the current and coming periods are still coming down. For 2022 Q4, total S&P 500 earnings are currently expected to decline -4.1% from the year-earlier period. This is down from +1.7% on October 7th and +2.5% on August 31st. For more details about the Q3 earnings season, please read our weekly Earnings Preview report here >>> 3 Things We Learned From the Q3 Earnings Season

Today's Featured Analsyt Reports

Shares of JPMorgan Chase have modestly underperformed the Zacks Major Banks industry over the past year (-21.7% vs. -20.8%). The company’s exposure to a weakening economic outlook remains the primary headwind, offsetting the benefits from improved margins as a result of the Fed's tightening cycle. Steadily rising operating expenses remains a key headwind.

Given the possibility of an economic downturn and to meet higher capital requirements, the bank has suspended buybacks. However, opening of new branches, strategic buyouts/investments and global expansion and digitization efforts are likely to keep driving the company’s financials.

Further, higher interest rates and steady growth in loan demand are expected to result in a robust improvement in net interest income (NII). Our estimates for NII (managed) suggest a CAGR of around 19% over the next three years.

(You can read the full research report on JPMorgan Chase here >>>)

Shares of Canadian Pacific Railway have outperformed the Zacks Transportation - Rail industry over the year-to-date period (+7.0% vs. -14.1%). The company expects double-digit RTM- growth in the second half of 2022 leading to volume and earnings growth for the year. The buyout of Kansas City Southern, completed last year, is a huge positive and should aid results in the coming quarters.

With gradual recovery in freight-market conditions, freight revenues, contributing majority to the top line, looks encouraging for the company. Canadian Pacific's efforts to pay out dividends to its shareholders instils investor confidence and positively impact the company's earnings per share.

However, higher operating expenses continue to weigh on the company's bottom line. High debt-to-equity ratio does not bode well and is risky as it implies that the company is aggressively financing its growth with debt. Partly due to these headwinds, the stock has declined in the past year.

(You can read the full research report on Canadian Pacific Railway >>>)

Shares of Equinix have underperformed the Zacks REIT and Equity Trust - Retail industry over the past year (-24.0% vs. -19.0%). The company’s huge capital outlay for expansion is a concern as interest rate hikes might adversely impact the borrowing costs to fund these projects. Also, stiff competition from industry peers may lead to aggressive pricing.

The recent estimate revisions trend for 2022 funds from operations (FFO) per share indicates an unfavorable outlook. However, Equinix’s second-quarter results were driven by steady growth in colocation and inter-connection revenues, marking the 78th consecutive quarter of top-line growth.

Its global data-center portfolio is set to gain from the high demand for inter-connected data-center space, given the rise in enterprise cloud adoption and Internet customers’ demand. Equinix focuses on acquisitions and developments to expand its data-center capacity in key markets.

(You can read the full research report on Equinix here >>>)

Other noteworthy reports we are featuring today include Halliburton Company (HAL), Gartner, Inc. (IT), and Datadog, Inc. (DDOG).

Sheraz Mian
 
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>>>