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The Zacks Analyst Blog Highlights: Motorola, NIKE and Roper

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·7 min read
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For Immediate Release

Chicago, IL – December 2, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Motorola Solutions, Inc. MSI, NIKE Inc. NKE and Roper Technologies, Inc. ROP.

Here are highlights from Tuesday’s Analyst Blog:

3 Diverse Stocks that Hiked Their Dividend Despite Coronavirus Woes

With the gradual resumption of normal business activities that were largely suspended due to the coronavirus-induced lockdown restrictions, the U.S. economy witnessed a dramatic turnaround to record 33.1% growth in the third quarter of 2020. This followed a dismal 31.4% contraction in the second quarter as the deadly virus held the global economy hostage. With countless deaths and business operations coming to a standstill, millions lost their jobs, while several others filed for unemployment benefits to sustain the economic hardships.

In order to weed off the liquidity crisis, corporate sector resorted to various cost-cutting measures including furloughs, layoffs and reduction in discretionary expenses. Some other firms looked beyond the short-term funding avenues, such as revolving lines of bank credit, to bridge temporary cash shortfalls.

Some others employed one of the most common and widely followed trend to perk up the liquidity position during recessionary conditions — dividend cut or suspension of dividend payment until the overall situation improves. Although a bulk of the firms across diverse sectors has increasingly followed the drift, a handful has chosen to swim against the tide and continued rewarding shareholders with dividend hikes.

Let us dig deep into three such stocks to gauge the underlying metrics that reflect their inherent financial strengths.

Motorola Solutions, Inc.: This leading communications equipment manufacturer has recently hiked its quarterly dividend by 11% year over year to 71 cents per share. Motorola currently has a dividend payout rate of 35.6%, which has increased sequentially over the past couple of quarters, indicating that it is sharing more of its earnings with stockholders.

The current hike reflects the inherent financial strength of the company and strong cash flow driven by healthy execution of operating plans. As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. It intends to boost its position in the public safety domain by entering into alliances with other players in the ecosystem.

Despite coronavirus-induced adversities, Motorola reported solid third-quarter 2020 results with strong demand pull across video security and services, land mobile radio products and related software. Motorola has a long-term earnings growth expectation of 9%. It delivered a positive earnings surprise of 12.8%, on average, in the trailing four quarters and has a VGM Score of B. Motorola is housed within the Wireless Equipment industry, which carries a Zacks Industry Rank #120, which places it among the top 47% of more than 250 Zacks industries.

The stock’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Motorola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NIKE Inc.: This shoe and apparel retailer recently hiked its quarterly dividend by 12% year over year to 27.5 cents per share. NIKE has time and again testified its commitment to enhancing shareholder value, aided by its strong financial position. The company has consecutively increased dividends over the past 19 years and currently has a dividend payout rate of 51%.

NIKE has benefited from the shift to a digital ecosystem as consumers favored online sales compared to brick-and-mortar stores due to social distancing restrictions. The company believes that digital acceleration reflects a strategic shift toward a new marketplace, rather than being a temporary solution to the coronavirus-related challenges in physical markets. Even as stores reopen, the company continues to witness strong digital trends, which demonstrates the strength of its brands and investments made over the past several years to improve digital consumer experiences.

NIKE recorded healthy first-quarter fiscal 2021 results on robust growth in digital business despite soft retail traffic and wholesale revenues. This Zacks Rank #3 stock has a long-term earnings growth expectation of 16.7%. Nike is housed within the Shoes and Retail Apparel industry, which carries a Zacks Industry Rank #68, which places it among the top 27% of more than 250 Zacks industries.

Roper Technologies, Inc.: This industrial goods manufacturer recently hiked its quarterly dividend by 10% year over year to 56.25 cents per share. Roper remains committed to rewarding shareholders handsomely through dividend payments. In the first nine months of 2020, the company distributed $160 million as dividends. The company has consecutively increased dividends over the past 28 years and currently has a dividend payout rate of 15.9%.

Roper has benefited from high recurring revenue mix, strong customer retention, expanding network software business and strength across its portfolio. In addition, continued focus on investing for long term and sustainable organic growth, along with product innovations, is likely to be beneficial.

Roper recorded healthy third-quarter results on broad-based growth across all segments. This Zacks Rank #3 stock has a long-term earnings growth expectation of 10.5%. It delivered a positive earnings surprise of 6%, on average, in the trailing four quarters. Roper is housed within the Manufacturing - General Industrial industry, which carries a Zacks Industry Rank #84, which places it among the top 33% of more than 250 Zacks industries.

Moving Forward

Despite expectations of a mass vaccine hitting the markets in early 2021 based on high efficacy results in the trials, the economy is likely to take a hit in the fourth quarter. This is because renewed lockdown measures by local administrative authorities owing to the latest bout of the deadly virus attack has fueled speculations of a sedate overall economic growth. Amid such a scenario, healthy dividend payments by stocks with solid fundamentals could be an enticing proposition for investors.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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