For Immediate Release
Chicago, IL – May 30, 2023 – Zacks Equity Research shares Caterpillar (
CAT Quick Quote CAT - Free Report) as the Bull of the Day and Nutrien ( NTR Quick Quote NTR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Kinder Morgan, Inc. ( KMI Quick Quote KMI - Free Report) , MPLX LP ( MPLX Quick Quote MPLX - Free Report) and The Williams Companies Inc. ( WMB Quick Quote WMB - Free Report) .
Here is a synopsis of all five stocks.
A behemoth in the Zacks Industrial Products sector,
Caterpillar has seen its near-term earnings outlook improve nicely over the last several months, landing the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
Caterpillar is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. We see those iconic yellow machines at nearly every construction site.
The company operates through three primary segments: Construction Industries, Resource Industries, and Energy & Transportation. In addition, Caterpillar provides financing and other related services through its Financial Products segment.
Caterpillar posted better-than-expected results in its latest release, exceeding the Zacks Consensus EPS Estimate by nearly 30%. Quarterly revenue totaled $15.8 billion, more than 4% above expectations and improving roughly 17% from the year-ago period.
In addition, CAT shares could entice value-focused investors, with the current 11.9X forward earnings multiple sitting well below the 15.7X five-year median and the Zacks Industrial Products sector average.
For those with an appetite for income, CAT shares have that covered as well; the company’s annual dividend presently yields a solid 2.3% with a payout ratio sitting sustainably at 30% of earnings.
Impressively, CAT has shown a commitment to increasingly rewarding its shareholders, boasting an 8.2% five-year annualized dividend growth rate and holding a spot within the elite Dividend Aristocrat group.
And to top it off, Caterpillar carries a favorable growth profile, with estimates calling for a nearly 30% jump in earnings in the current fiscal year (FY23) on 10% higher revenues.
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Caterpillar would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).
Nutrien, a current Zacks Rank #5 (Strong Sell), has seen its near-term earnings outlook shift negatively across the board over the last several months.
Nutrien is a leading integrated provider of crop inputs and services, supplying growers through its leading global retail network. The company plays a vital role in helping farmers around the world sustainably increase food production.
In its latest release, Nutrien posted weak quarterly results, falling short of earnings expectations by nearly 30% and reporting revenue 8.5% below the Zacks Consensus estimate.
In fact, the company has fallen short of both earnings and revenue expectations in four consecutive quarters, with the average EPS surprise during the period sitting at -22%. The market reacted negatively to the lighter-than-expected results.
Shares pay a solid dividend, currently yielding 3.8% annually and well above the Zacks Basic Materials sector average. Of course, it’s worth noting that the company’s poor share performance year-to-date has amplified the yield.
NTR shares broke through the 200-day moving average in late 2022, reflecting a change in trend. Shares have been fiercely rejected in both instances they brushed up against the level.
Negative earnings estimate revisions from analysts and weak quarterly results paint a challenging picture for the company’s shares in the near term.
Nutrien is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook over the last several months.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content: 3 Midstream Stocks to Watch Amid Energy Market Volatility
The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The price of crude oil plunged to a negative $36.98 per barrel on Apr 20, 2020. However, with the rapid developments of vaccines, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration. Currently, WTI oil price is trading at more than $70 per barrel.
The business model of most energy players, by its inherent nature, is exposed to extreme volatility in commodity prices. Hence, it would be wise for investors to focus on midstream stocks like
Kinder Morgan, Inc., MPLX LP and The Williams Companies Inc. Midstream Energy Players to the Rescue
Although the fate of energy players is highly dependent on oil and gas prices, stocks in midstream space have lower exposure to volatility in commodity prices. This is because midstream players generate stable fee-based revenues since the transportation and storage assets are being booked by shippers for the long term. Thus, their business model is relatively low-risk, which indicates considerably less exposure to oil and gas prices and volume risks.
We have employed our
Stock Screener to zero in on three stocks belonging to the midstream energy space that are well poised to gain, and hence investors should keep an eye on these stocks. All the stocks carry a Zacks Rank #3 (Hold). You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here 3 Stocks in the Spotlight Kinder Morgan: With its operating interests in oil and gas pipeline networks spread across 83,000 miles, KMI is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
Kinder Morgan is poised to grow on the back of its business model, which is relatively resilient to volume and commodity price risks.
MPLX: The firm has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflow. With a strong focus on returning capital to unit holders, MPLX repurchased $491 million of common units last year. Under its unit repurchase authorization, the partnership has yet to buy back the remaining $846 million of its units. The Williams Companies: It is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, The Williams Companies connects premium basins in the United States to the key market. WMB’s assets can meet 30% of the nation’s consumption of natural gas, which is utilized for heating purposes and clean-energy generation.
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