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Research Daily

Mark Vickery

Top Stock Reports for Analog Devices, Southern Company & Canadian Pacific Railway


Trades from $3

Wednesday, December 7, 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 Analog Devices, Inc. (ADI), The Southern Co. (SO) and Canadian Pacific Railway Ltd. (CP). 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 >>>

Analog Devices’ shares have declined -10.6% over the past year against the Zacks Semiconductor - Analog and Mixed industry’s decline of -18.3%. The company is facing pandemic-induced supply-chain constraints are concerns. Further, geopolitical tensions led by Russia-Ukraine war are major overhangs.

However, strength across communication, consumer, industrial and automotive end-markets drove the results. Solid demand for high-performance analog as well as mixed signal solutions was a tailwind. Strong momentum across the electric vehicle space on the back of robust Battery Management System solutions remains a positive.

Further, growing power design wins are other positives. Solid momentum of HEV platform across cabin electronics ecosystem remains a tailwind. Considering the above-mentioned factors, the Zacks analysts expect first-quarter fiscal 2023 total revenue to rise 15.3% year over year.

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

Shares of Southern Company have outperformed the Zacks Utility - Electric Power industry over the past year (+5.8% vs. -0.8%). The company is leveraging on the demographics of its operating territories, as in healthy population and job growth, Southern Company has gradually increased its customer base.

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 58.7% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. Therefore, Southern Company warrants a cautious stance from the investors.

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

Shares of Canadian Pacific Railway have outperformed the Zacks Transportation - Rail industry over the past year (+9.5% vs. -11.0%). With gradual recovery in freight-market conditions, freight revenues are increasing. Notably, freight revenues, which account for majority of Canadian Pacific's top line, increased 6.7% in the first nine months of 2022. CP's efforts to reward its shareholders through dividends also bode well.

In third-quarter 2022, CP shelled out dividends worth C$177 million, up 39.4% year over year. Partly due to these headwinds, the stock has gained in the past year.

However, high operating expenses (up 12% year over year in the first nine months of 2022) continue to weigh on the company's bottom line. Elevated fuel costs (up 60.7% in the first nine months of 2022) are leading to increased operating expenses. High debt-to-equity ratio also does not bode well for CP as it implies that the company is aggressively financing its growth with debt.

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

Other noteworthy reports we are featuring today include Mitsubishi UFJ Financial Group, Inc. (MUFG), CME Group Inc. (CME), and UBS Group AG (UBS).

Mark Vickery
Senior Editor

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>>>

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