Monday, June 6, 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 Accenture plc (ACN), SAP SE (SAP), and The Estée Lauder Companies Inc. (EL). 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 >>>
Accenture shares have gained +9.3% over the past year, roughly in-line with the Zacks Consulting Services industry’s gain of +10.2%, but magnitude better than the broader market’s -3.7% decline. The Zacks analyst believes that the company has been steadily gaining traction in its outsourcing and consulting businesses. The company has been strategically enhancing its cloud and digital marketing suite through buyouts and partnerships. The company’s strong operating cash flow has helped it reward its shareholders in the form of dividend payments and share repurchases, and pursue opportunities in areas that show true potential.
However, On the flip side, pricing pressure due to significant competition from strong companies like Genpact, Cognizant and Infosys, remains a concern. Global presence exposes it to foreign currency exchange rate fluctuations. Buyout-related integration risks continues to remain a concern.
(You can read the full research report on Accenture here >>>)
SAP shares have declined -26.4% over the year-to-date basis against the Zacks Computer – Software industry’s decline of -21.2%. The Zacks analyst believes that the company’s weak uptake of software licenses and support offerings remains a headwind. Stiff competition and increasing costs to enhance cloud-based offerings is likely to exert pressure on the company’s profitability at least in the near term.
Though suspension of Russian operations amid the ongoing Ukraine war is expected to affect both revenues and non-IFRS operating profit, the company reiterated its outlook for 2022. Nevertheless, the company’s performance is gaining from strength in its cloud business, especially the new Rise with SAP solution. Momentum in SAP’s Business Process Intelligence platform, particularly the S/4HANA solutions along with steady traction witnessed in SuccessFactors Employee Central, Ariba and Fieldglass, Qualtrics and other cloud-based offerings is noteworthy.
(You can read the full research report on SAP here >>>)
The Estée Lauder shares have outperformed the Zacks Cosmetics industry over the past two years (+31.0% vs. -10.2%). The Zacks analyst believes that the company is benefiting from its growing Skin Care portfolio. The company’s strong presence in emerging markets has also been a driver. Further, it has a robust online business and the company expects it to be a major growth engine for the upcoming few years. These upsides were visible in the company’s third-quarter fiscal 2022 results, wherein the top and the bottom line rose year over year.
However, the company is battling pandemic-induced restrictions in the Asia/Pacific region. During the third quarter, organic sales fell in mid-single-digits in Mainland China, as a sharp decline in brick-and-mortar sales offset online growth. The company revised its fiscal 2022 outlook downward owing to the added headwinds affecting the fiscal fourth-quarter view.
(You can read the full research report on The Estee Lauder here >>>)
Other noteworthy reports we are featuring today include CME Group Inc. (CME), ABB Ltd (ABB), and Aon plc (AON).
Sheraz Mian
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>>>
Today’s Must Read
Accenture (ACN) Gains From Service Demand Amid Talent Cost
Solid Momentum in Cloud Business Driving SAP’s Performance
The Estee Lauder Companies (EL) Gains on Skin Care Category
Featured Reports
CME Group (CME) Banks on Improving Top Line, Expenses Hurt
Per the Zacks analyst, its strong revenues driven by organic growth, steady market position and diverse product lines has led to significant growth. However, escalating expenses hurt its margins.
Solid Electrification Segment Benefits ABB, High Costs Hurt
Per the Zacks analyst, strong momentum in ABB’s Electrification segment, led by strength in the power distribution utilities market, should drive its revenues. High operating costs remain a concern.
Acquisitions and Strong Capital Position Benefit Aon (AON)
Per the Zacks Analyst, buyouts and tie-ups have enhanced Aon’s capabilities, which, in turn, have driven revenues. Further, a solid capital position remains a key catalyst.
Solid End Markets to Drive Emerson (EMR), High Debt Hurts
Per the Zacks analyst, Emerson will benefit from strength across its chemical, life science, power, electronics and semiconductor end markets. The company’s high debt level remains concerning.
Strong Surgical Sales Aid Alcon (ALC) Amid Supply Restraints
The Zacks analyst is optimistic about Alcon’s Surgical arm which saw robust implantables, consumables and equipment sales growth. Yet, supply chain constraints like high labor costs do not bode well.
High Demand For Industrial Property to Aid Duke Realty (DRE)
Per the Zacks Analyst, Duke Realty is poised to gain from high demand from the e-commerce boom and rising inventory levels to combat supply-chain disruption. Yet, stiff competition is a worry.
Investment on Infrastructure & Clean Assets Aid Evergy (EVRG)
Per the Zacks analyst, Evergy’s 10.7 billion investment through 2026 to add clean sources to generate electricity and strengthen infrastructure to serve customers, will boost its profitability.
New Upgrades
Paycom Software (PAYC) Benefits From Growing Customer Base
Per the Zacks Analyst, Paycom Software is benefiting from its differentiated employee strategy, measurement capabilities and comprehensive product offerings, that are helping it win new customers.
PDC Energy (PDCE) Aided by Cost Cuts, Strong Free Cash Flow
The Zacks analyst likes PDC Energy’s disciplined approach to capital spending, which together with surging oil and natural gas prices, should boost its free cash flow generation.
High Demand & Operational Excellence Aid Weyerhaeuser (WY)
Per the Zacks analyst, Weyerhaeuser’s focus on operational excellence plans, like merchandising for value, harvest & transportation efficiency and more, along with high product demand are encouraging.
New Downgrades
High Expenses & Dim Parcel Volume View Hit ZTO Express (ZTO)
The Zacks analyst is pessimistic about ZTO Express’ (ZTO) escalating SG&A expenses, which might hurt the bottom line. Also, reduced expectation for parcel volumes in 2022 is worrisome.
Supply Chain Constraints & Higher Costs Hurt Woodward (WWD)
Per the Zacks analyst, Woodward’s performance is being affected by increases in material and labour costs related to supply chain woes. Weakness in Industrial segment is an added concern.
Supply Chain Woes to Ail Rite Aid’s (RAD) Performance
Per the Zacks analyst, Rite Aid has been reeling under supply chain pressures which affected inventory in Q4. Also, management expects decline in COVID-19 vaccination during fisca
l 2023.
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CME Group Inc. (CME) : Free Stock Analysis Report
Accenture PLC (ACN) : Free Stock Analysis Report
SAP SE (SAP) : Free Stock Analysis Report
ABB Ltd (ABB) : Free Stock Analysis Report
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
Aon plc (AON) : Free Stock Analysis Report
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