Friday, February 10, 2023

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 SAP SE (SAP), Northrop Grumman Corp. (NOC) and TC Energy Corp. (TRP). 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 >>>

Shares of SAP have declined -1.4% over the past year against the Zacks Computer - Software industry’s decline of -9.7%. The company’s performance is affected due to continued softness in software licenses and the support business segment, coupled with supply chain constraints, global macroeconomic weakness and geopolitical instability. Also, increasing research & development and sales & marketing expenses to cope with intensifying competition in the cloud space are concerns.

However, SAP’s Q1 performance benefited from continued strength in its cloud business (especially the new "Rise with SAP" solution) across all regions. There is momentum in SAP’s business technology platform, particularly the S/4HANA solutions.

The company’s restructuring plan is expected to better align its operating models and go-to-market approach with its accelerated cloud transformation. Frequent product launches like SAP Build and strategic collaborations bode well.

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

Northrop Grumman’s shares have outperformed the Zacks Aerospace - Defense industry over the past year (+13.6% vs. -8.1%). The company continues to witness strong demand for its products, driven by programs like F-35, Triton and SABR radar Global Hawk. Solid U.S. budgetary provisions make the analyst confident about a solid contract inflow from the Pentagon. Northrop also holds a strong solvency position.

However, a comparative analysis of the stock’s trailing 12-month EV/Sales ratio reflects a relatively gloomy picture. The prolonged impact of COVID-19 may cause extended disruptions in its supply chain. High inflation rates across the U.S. might also hurt the stock. It expects further impacts related to the conflict in Ukraine and economic sanctions imposed on Russia.

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

Shares of Calgary, Alberta-based TC Energy have underperformed the Zacks Alternative Energy - Other industry over the past year (-22.1% vs. +4.0%). The company is witnessing continued timing and cost overrun issues over large construction projects, plus the cancellation of Keystone XL, are major overhangs.

Moreover, further share price appreciation will likely be tied to the progress on its debt reduction front, which sits at a massive C$40.92 billion. Therefore, investors are advised to wait for a better entry point.

Nevertheless, TC Energy is predominantly a natural gas pipeline operator, with operations spanning Canada, the U.S. and Mexico. A quality stock with industry-leading wide-moat assets, TC Energy has a secured portfolio of C$34 billion in growth projects.

This should support the company’s stated dividend growth commitment of 3-5% annually in the future. TC Energy’s takeover of its TC Pipelines unit last year has helped it to improve corporate governance and lower the cost of capital.

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

Other noteworthy reports we are featuring today include Nucor Corp. (NUE), Extra Space Storage Inc. (EXR) and MGM Resorts International (MGM).

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>>>