Today's Must Read
User Growth, Instagram Strength Aids Meta Platforms (META)
Wide Market Reach & New Product Development Aid Eaton (ETN)
Friday, November 25, 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 Exxon Mobil Corporation (XOM), Meta Platforms, Inc. (META) and Eaton Corporation plc (ETN). 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 >>>
Exxon Mobil shares have handily outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+85.5% vs. +55.6%). The company’s bellwether status and optimal integrated capital structure that has historically produced industry-leading returns make it a relatively lower-risk energy sector play.
The firm has made more than 30 discoveries in offshore Guyana since 2015. ExxonMobil also has a strong presence in the prolific Permian Basin, where it expects to boost production volumes by 25% in 2022. The energy major has significantly lower debt exposure than composite players belonging to the industry. XOM recently reported strong third-quarter earnings owing to higher prices and production, and strong refining margins.
However, the company has been constantly bearing the brunt of increasing expenses, adversely affecting the income. Also, the aggressive capital budget remains a headwind for the company. As such, the stock warrants a cautious stance.
(You can read the full research report on Exxom Mobil here >>>)
Shares of Meta Platforms have been laggards this year, with the market unhappy with management's spending plans on the metaverse given the uncertain pay off from the project over the near to medium term. On top of the metaverse spending issue is the weak outlook for digital ad spending in the current uncertain macroeconomic backdrop. Unfavorable forex, targeting and measurement headwinds due to Apple’s iOS changes, normalization of e-commerce after the pandemic peak and higher inflation hurt growth in the reported quarter.
User base in Europe declined in the reported quarter. Meta’s fourth-quarter guidance reflects macroeconomic and forex concerns. Weak advertising demand is a headwind. Meta expects Reels to monetize much slower than feed or stories.
However, Meta is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its products like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.
(You can read the full research report on Meta Platforms here >>>)
Shares of Eaton have declined -1.3% over the past year against the Zacks Manufacturing - Electronics industry’s decline of -10.2%. The company’s global operations expose it to unpredictable currency translation, cyber-attacks and security breaches, which might impact operations. The shortage of raw materials and supplier insolvencies might impact production and operations.
However, Eaton’s third-quarter earnings per share were better than expected. ETN’s research and development investments allowed it to develop products for providing efficient power management solutions to customers.
The spin-off of non-core businesses and acquisitions will allow Eaton to further expand operations. Eaton's strategy to manufacture in the zone of sale has helped it reduce costs. Strong cash flow is supporting the company in debt reduction and dividend payments.
(You can read the full research report on Eaton here >>>)
Other noteworthy reports we are featuring today include Canadian Natural Resources Limited (CNQ), Keysight Technologies, Inc. (KEYS), and ANSYS, Inc. (ANSS).
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>>>