Top Stock Reports for Toyota Motor, Fomento Economico Mexicano & United Parcel Service
Friday, June 16, 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 Toyota Motor Corporation (TM), Fomento Económico Mexicano, S.A.B. de C.V. (FMX) and United Parcel Service, Inc. (UPS). 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 >>>
Toyota Motor shares have outperformed the Zacks Automotive - Foreign industry over the past year (+7.4% vs. -10.1%) reflecting a still-favorable automobile demand environment and Toyota's robust product line-up, including in the EV space. To capitalize on the accelerated global shift to green cars, the auto giant is deepening focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness.
Toyota Motor’s commitment to return capital to shareholders and upbeat fiscal 2024 view spark confidence. However, commodity cost inflation is expected to weigh on gross margins. Supply-chain disruptions and tough labor market will play spoilsports.
Unfavorable foreign currency translations and high R&D expenses are also likely to limit profits. Also, elevated leverage of the firm may restrict its financial flexibility to tap onto growth opportunities. Thus, investors are advised to wait for a better entry point.
(You can read the full research report on Toyota Motor here >>>)
Shares of Fomento Económico Mexicano have outperformed the Zacks Beverages - Soft drinks industry over the past year (+64.5% vs. +21.0%). The company’s top and bottom-line improved year over year on strength across segments and improved operating income. Revenues improved on gains across all business units resulting from effective growth strategies and robust demand across markets.
Fomento Económico Mexicano’s digital initiatives and business expansion endeavors have also been aiding results. Its efforts to expand in the U.S. specialized distribution segment bodes well. The company displays strong financial flexibility.
However, FEMSA continued to witness operating margin decline due to contraction at Proximity, Health and Envoy Solutions divisions. Supply-chain disruptions and higher raw material costs hurt results.
(You can read the full research report on Formento Economico Mexicano here >>>)
United Parcel Service shares have modestly outperformed the Zacks Transportation - Air Freight and Cargo industry over the past year (+9.0% vs. +8.5%). The company’s is looking to drive growth in this uncertain scenario by improving efficiencies. Efforts to reward its shareholders through dividends and buybacks bode well for UPS.
United Parcel Service 's strong free cash flow generating ability pleases us and supports its shareholder-friendly activities. UPS anticipates making dividend payments of $5.4 billion apart from buying back shares worth $3 billion in 2023.
However, the new forecast is at the low end of the previous outlook and much lower than 2022's actual figure. The gloomy forecast is mainly due to weak consumer sales. Notably, average daily volume declined 5.4% in first-quarter 2023 at the U.S. Domestic package segment. The same declined 6.2% at the International Package division.
(You can read the full research report on United Parcel Service here >>>)
Other noteworthy reports we are featuring today include Caterpillar Inc. (CAT), ConocoPhillips (COP) and Union Pacific Corporation (UNP).
Director of Research
Sheraz Mian
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
EV Push to Fuel Toyota's (TM) Growth Amid Cost Woes
Investments in Specialized Distribution to Aid FEMSA (FMX)
Dividends & Buybacks Buoy UPS, Escalating Expenses Hurt
Featured Reports
Caterpillar (CAT) to Gain on Strong Demand in End Markets
Per the Zacks analyst, solid backlog, improving end-market demand and focus on making strategic investments in expanded offerings, services and digital initiatives will drive Caterpillar's results.
ConocoPhillips (COP) Banks On Oil-Rich Bakken Shale Assets
The Zacks analyst is upbeat about the 750 undrilled Bakken Shale play locations of ConocoPhillips, which will drive oil production growth. Yet, rising production and operating costs are concerning.
Union Pacific's (UNP) Dividends Support, Fuel Costs Hurt
The Zacks analyst welcomes Union Pacific's efforts to add shareholder value. However, high operating expenses, mainly due to escalated fuel costs, are worrisome.
Beyond Beer Expansion to Drive AB InBev's (BUD) Top Line
Per the Zacks analyst, AB InBev is focused on expanding its Beyond Beer portfolio, which has been aiding the top line. Its Beyond Beer portfolio contributed more than $325 million to revenues in Q1.
Solid Product Suite Aids Ecolab (ECL) Amid Compliance Risks
The Zacks analyst is upbeat about Ecolab's robust product portfolio despite its business being subjected to various environmental laws and regulations.
Focus on Mixed-Use Developments to Aid Simon Property (SPG)
Per the Zacks Analyst, Simon Property is well-poised to benefit from its focus on mixed-use developments and omni-channel retailing. However, e-commerce adoption and high interest rates are key woes.
Pool Corp (POOL) Banks on Expansion Efforts, High Costs Ail
Per the Zacks analyst, Pool Corp continues to focus on expansions through acquisitions to boost customer relationship and services. However, rise in freight and marketing expenses are a concern.
New Upgrades
Strength in Water Infrastructure Segment Aids Xylem (XYL)
Per the Zacks analyst, solid traction of Xylem's Water Infrastructure segment, led by effective price realization and strength in both utility and industrial end markets, will result in momentum.
IPG Photonics (IPGP) Rides on LightWELD, Green Laser Demand
Per the Zacks analyst, IPG is benefiting from strong demand for handheld welder, LightWELD, driven by robust sales of EV applications. Demand for green lasers is also expected to remain high.
InterDigital (IDCC) Rides on Portfolio Strength, R&D Focus
Per the Zacks analyst, InterDigital's extensive patent portfolio provides it a significant competitive advantage against rivals and helps it to stay at the forefront of wireless technology innovation.
New Downgrades
Pipeline Setbacks, Decline in Jakafi Sales Hurt Incyte (INCY)
Per the Zacks analyst, the recent pipeline setbacks dent Incyte's efforts to expand its portfolio and reduce its major dependence on lead drug Jakafi. The decline in Jakafi sales is also a concern.
Clean Fuel Use, JV Termination Ail Arch Resources (ARCH)
Per the Zacks analyst, Arch Resources prospects has been impacted by rising usage of clean fuel and termination of joint venture agreement with Peabody Energy might hinder growth prospects.
Falling Portfolio Income & High Costs Hurt PRA Group (PRAA)
Per the Zacks analyst, PRA Group's declining portfolio income is putting pressure on the top line. Moreover, escalating expenses continue to weigh on the margins.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
Toyota Motor Corporation (TM) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
