Thursday, June 16, 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 The Procter & Gamble Co. (PG), Sony Group Corp. (SONY), and Diageo plc (DEO). 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 >>>

Procter & Gamble shares have outperformed the Zacks Soap and Cleaning Materials industry over the past year (+1.6% vs. -7.9%). The company reported earnings surprise for more than three years, and revenues beat estimates for the eighth straight time in the quarter.

Results were driven by improved productivity amid cost headwinds, along with the rising demand for cleaning products. Gains from cost productivity also aided results. Management lifted its fiscal 2022 view.

It witnessed SG&A expense leverage, owing to savings from overhead and marketing expenses, and cost leverage gains due to higher sales and real estate. However, unfavorable mix, commodity cost inflation, increase in freight costs, product and packaging investments and other impacts hurt margins. It expects higher commodity and freight costs to persist in fiscal 2022.

(You an read the full research report on Procter & Gamble here >>>)

Sony shares have declined -14.5% over the past year against the Zacks Audio Video Production industry’s decline of -16.1%. The company expects operating margin for the fiscal year to be likely affected by decline in Pictures and G&NS segment operating incomes.

A stiff rivalry and high costs pose as concerns. However, it remains focused on the premium segment of the branded products market to maximize growth. Its music experience, 360 Reality Audio, introduced to make listeners feel immersed in sound from all directions, bodes well.

Nevertheless, sales are expected to improve due to the higher G&NS and I&SS segments. The company is also benefiting from an increase in sales in the Music, Pictures, Imaging & Sensing Solutions and Financial Services units. Strategic acquisitions and joint ventures bode well in the long haul. The company now is working towards achieving carbon neutrality ten years earlier than prior targeted deadline of 2050.

(You an read the full research report on Sony here >>>)

Diageo shares have declined -10.9% over the past year against the Zacks Beverages - Alcohol industry’s decline of -13.7%. The company is witnessing continued inflationary pressures and currency headwinds which are concerning.

Moreover, margin growth was driven by supply productivity savings and price increases, which more than offset the higher cost inflation. It provided a decent view for fiscal 2022, with organic sales momentum likely to continue in the second half of fiscal 2022.

However, continued recovery in the on-trade channel, strong consumer demand in the off-trade and market share gains, which also aided the company’s first-half fiscal 2022 performance. The company witnessed sales, operating margin and earnings growth in first-half fiscal 2021 driven by organic sales growth across all regions. Strong recovery in gross margin and operating cost leverage along with higher marketing investments aided organic operating margin growth.

(You an read the full research report on Diageo here >>>)

Other noteworthy reports we are featuring today include Toyota Motor Corp. (TM), Petroleo Brasileiro (PBR) and Intuitive Surgical, Inc. (ISRG).

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>>>

Today's Must Read

High Demand & Productivity Plan Drives P&G's (PG) Growth

SONY to Gain from Brand Focus & Improving G&NS Segment Sales

Strength in North America to Drive Diageo's (DEO) Top Line

Featured Reports

EV Push & Product Growth to Aid Toyota (TM) Amid High Cost
Per the Zacks analyst, Toyota's top line will gain from an intensive electrification push and portfolio expansion. Yet, commodity cost inflation and soaring R&D costs are likely to dent profits.

Intuitive Surgical (ISRG) Rides on a Strong Robotics Suite
The Zacks analyst is upbeat about Intuitive Surgical's strength in robot-based da Vinci surgical system despite its operation in a highly competitive market.

Freight Revenues Bail out Canadian Pacific (CP), Costs Hurt
The Zacks analyst is impressed with the uptick in freight revenues. Escalated costs are, however, hurting the bottom line.

Robust Revenues Aid O'Reilly (ORLY), High Debt Hurts
Per the Zacks analyst, O'Reilly gains from strength in revenues year-over-year led by e-commerce and store expansion efforts. However, an elevated leverage of 95% is concerning

Electronic Arts (EA) Benefits From Solid Gaming Portfolio
Per the Zacks analyst, Electronic Arts' top line benefits from a burgeoning user base on the back of a sturdy gaming portfolio.

Improving Premiums Aid Arch Capital (ACGL), Cat loss Ail
Per the Zacks analyst, Arch Capital benefits from its diverse product and service portfolio that in turn has been fueling premiums. However, exposure to cat loss inducing underwriting volatility ails.

U.S. Budget to Aid TransDigm (TDG) Amid Weak Travel Demand
Per the Zacks analyst, expansionary budgetary policy adopted by the U.S. administration should benefit TransDigm. Yet poor demand for international travel might continue to hurt the stock.

New Upgrades

Petrobras (PBR) Aided by Brazil's Pre-Salt Oil Reserves
The Zacks analyst believes that Petrobras' stake in Brazil's huge pre-salt oil reserves puts it in an enviable position to maintain an impressive production growth profile for years to come.

Enterprise (EPD) Banks On Its $4.6B Key Midstream Projects
Per the Zacks analyst, Enterprise will generate additional fee-based revenues from its $4.6-BILLION key midstream projects under construction.

Signet (SIG) to Keep Gaining From Omni-Channel Capabilities
Per Zacks analyst, Signet is integrating physical stores with advanced virtual experiences through data-driven in-store consultations, and services like buy online pickup in-store and curbside options

New Downgrades

Dismal Traffic & High Costs Hurt Yum China's (YUMC) Prospects
Per the Zacks analyst, Yum China has been witnessing elevated costs owing to higher inflation in commodity, wage and delivery costs. Also, decline in traffic from pre-pandemic levels is a concern.

Soft Comps Performance to Hurt Five Below's (OLLI) Sales
Per the Zacks analyst, soft comparable sales performance may hurt Five Below's top line. The metric slid 3.6% in the first quarter. Management expects 2-5% decline in second-quarter comparable sales.

Soft Product Shipment & Supply Chain Woes to Hurt Dolby (DLB)
Per the Zacks analyst, pandemic induced global supply chain troubles and higher product costs is a major concern for Dolby. Weakness in product shipment is an added concern

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