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Top Research Reports for Walt Disney, Union Pacific & Fomento Economico

Wednesday, July 27, 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 Walt Disney Company (DIS), Union Pacific Corporation (UNP) and Fomento Económico Mexicano, S.A.B. de C.V. (FMX). 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 >>>

Walt Disney shares have declined -35.6% over the year-to-date basis against the Zacks Media Conglomerates industry’s decline of -30.4% as sentiment has soured on the company's streaming business. The company’s profitability is expected to be negatively impacted by higher investments in content, which will drive up programming and production costs at Media and Entertainment Distribution.

Closure of its Asian theme park due to COVID-19 doesn’t bode well for the Parks, Experiences and Products top-line growth. Disney expects this to reduce operating income by up to $350 million in the fiscal third quarter. Disney’s leveraged balance sheet is a concern.

Nevertheless, the company benefits from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering. Availability in the Nordics, Latin America and other Asian territories is helping it in expanding user base. Revival in Parks business also hold promise in the long haul

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

Union Pacific shares have outperformed the Zacks Transportation - Rail industry over the past year (+1.8% vs. +1.7%). The Zacks analyst believes that the efforts to reward its shareholders even in the current uncertain scenario is worth appreciating. The company hiked dividend twice in 2021. In May 2022, UNP upped its quarterly dividend by a further 10%. The railroad operator is also active on the buyback front.

Management expects share repurchases in 2022 to be in line with the 2021 levels of $7.3 billion. UNP's strong free cash flow generating ability supports its shareholder-friendly activities. An uptick in freight revenues as economic activities pick up the pace is an added positive.

However, escalation in fuel costs as oil prices move north induced a 16% rise in the operating expenses in the March quarter. Costs are likely to be high in the June quarter as well. Detailed results will be out on Jul 21. High debt/EBITDA ratio is another worry. Increased capex may also be bothersome

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

Fomento Económico Mexicano shares have declined -29.8% over the past year against the Zacks Beverages - Soft drinks industry’s gain of +7.7%. The company’s dismal performance can be attributed to continued gross margin pressures, which also led to bottom line miss in first-quarter 2022. Gross margin in the first-quarter was affected by contraction at FEMSA Comercio’s Fuel Division and Coca-Cola FEMSA.

First quarter results were also partly hurt by the impacts of supply-chain disruptions and higher raw material costs. However, the company’s top line surpassed the Zacks Consensus Estimate and improved year over year. This marked the fourth straight quarter of revenue beat.

Revenue growth was driven by gains across all business units. FEMSA’s digital initiatives and business expansion endeavors also act as upsides. Its efforts to expand in the U.S. specialized distribution segment also bodes well.

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

Other noteworthy reports we are featuring today include Amazon.com, Inc. (AMZN), Cadence Design Systems, Inc. (CDNS), and Valero Energy Corporation (VLO).

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

Disney (DIS) Banks on Disney+ Growth & Reopening of Parks

Union Pacific (UNP) Strong on Dividends, Hurt by Fuel Costs

Investments in Specialized Distribution to Aid FEMSA (FMX)

Featured Reports

Prime Momentum & Growing AWS Adoption Benefit Amazon (AMZN)
Per the Zacks analyst, Amazon is benefiting from Prime enabled fast delivery services and robust content portfolio. Further, its strengthening cloud offerings are aiding the adoption rate of AWS.

Cadence (CDNS) Benefits from Product Portfolio & Acquisitions
Per the Zacks analyst, Cadence's performance is gaining from robust demand for the company's diversified product portfolio. Synergies from recent acquisitions also bode well.

Valero (VLO) Gains on Higher Gulf Coast Refinery Throughput
The Zacks analyst is impressed by Valero's Gulf Coast refineries, contributing the most to its total throughput volumes. Higher Gulf Coast export volumes will also support its margins.

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.

Strategic Buyouts Aid Raymond James (RJF), High Costs Ails
Per the Zacks analyst, Raymond James' efforts to expand through strategic acquisitions and global diversification will aid financials. However, weak capital markets and high costs are key concerns.

BioMarin's (BMRN) Key Drugs Aid Growth Amid Pipeline Setback
While BioMarin's key drugs like Vimzim and Naglazyme have been driving sales, the Zacks Analyst is concerned about the delay in BMRN's regulatory filing for hemophilia drug Roctavian with the FDA.

Robust Gaming Business Aid Hasbro (HAS), High Costs Hurt
Per the Zacks analyst, Hasbro is benefiting from benefiting from robust performance of its gaming category and a strong product lineup. However, the a rise in freight and input costs remain concerns.

New Upgrades

W.R. Berkley (WRB) is Set to Grow on Solid Insurance Business
Per the Zacks analyst, W.R. Berkley is set to grow on the strength of its Insurance business, growing international business, investment in alternative assets and solid capital position.

Albertsons' (ACI) Strong Digital Endeavors to Boost Sales
Per the Zacks analyst, Albertsons Companies has been directing resources toward expanding digital and omni-channel capabilities. The company's first-quarter digital sales rose 28% year on year.

Assurant (AIZ) Gains on Solid Capital Position, Premium Growth
The Zacks analyst is optimistic about solid Global Lifestyle segment of Assurant, which will drive improvement in earned premiums and fees. Solid capital position supports capital deployment.

New Downgrades

Supply-Chain Snafus & Cost Woes to Hurt Gentex (GNTX)
Commodity inflation, high labor costs and logistical challenges are likely to cause near-term margin compression, which make the Zacks analyst bearish on Gentex.

Higher Production Costs Weigh on Freeport (FCX)
According to the Zacks analyst, higher unit net cash costs per pound of copper resulting from an increase in energy and freight expenses will hurt the company's margins in 2022.

COVID-19 Resurgence Hurting Intuitive Surgical's (ISRG) Sales
Per the Zacks analyst, the resurgence of COVID-19 in past few months hurt da Vinci procedure volumes. Any increase in COVID-19 cases will likely lead to continued decline.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
 
Valero Energy Corporation (VLO) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
 
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