Tuesday, September 3, 2024

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 UnitedHealth Group Incorporated (UNH), The Procter & Gamble Company (PG) and HSBC Holdings plc (HSBC), as well as a micro-cap stock Oil-Dri Corporation of America (ODC). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

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 >>>

UnitedHealth shares have outperformed the Zacks Medical - HMOs industry over the past year (+25.9% vs. +22.4%). The company’s top line remains poised for growth on the back of a strong market position, new deals, renewed agreements and expansion of service offerings. The company’s solid health services segment provides diversification benefits. 

The Government business remains well-poised for growth in the future. Adjusted net earnings per share are anticipated to be in the $27.5-$28.00 band in 2024. A sturdy balance sheet enables business investments and prudent deployment of capital via share repurchases and dividend payments. The company increased its quarterly dividend by nearly 12%. 

However, membership in its global business continues to be a concern. High operating costs due to rising medical expenses are hurting margins. As such, the stock warrants a cautious stance.

(You can read the ful research report on United Health here >>>)

Shares of Procter & Gamble have gained +13.9% over the past year against the Zacks Soap and Cleaning Materials industry’s gain of +21.0%. The company has been gaining from a strategy that focuses on sustainability and adaptability, responding to the evolving demands of consumers, customers and society. 

Procter & Gamble has been focused on productivity and cost-saving plans to boost margins. This led to the bottom line beating the consensus mark for the eighth consecutive quarter in fourth-quarter fiscal 2024. PG provided an optimistic view for fiscal 2025. PG estimates all-in sales to increase 2-4% year over year in fiscal 2025. 

However, PG has been witnessing headwinds related to the market issues in Greater China, geopolitical tensions, and financial impacts from currency volatility. PG’s fiscal 2025 EPS view includes an after-tax headwind of $500 million related to unfavorable commodity costs and adverse currency.

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

HSBC shares have outperformed the Zacks Banks - Foreign industry over the past year (+30.8% vs. +28.2%). The company is witnessing a strong capital position, higher interest rates, an extensive network and business restructuring initiatives will keep aiding it. To focus more on the Asia region, it is moving away from less profitable markets and has announced plans to sell businesses in Argentina and Armenia. It has exited retail operations in the United States, Canada, France, New Zealand, Greece and Russia.

However, HSBC’s second-quarter 2024 results were hurt by higher expenses. While the company’s efforts to improve market share in the Asia region will aid financials, this will likely lead to a rise in near-term expenses. Because of its growth strategy and higher technology-related expenses, HSBC expects 2024 expenses to rise 5%. The current challenging macroeconomic backdrop is another major woe. 

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

Shares of Oil-Dri Corporation of America have outperformed the Zacks Chemical - Diversified industry over the past year (+4.3% vs. -5.1%). This microcap company with market capitalization of $496.85 million have acquired Ultra Pet Company which strengthens its position in the high-growth crystal cat litter segment and is expected to boost earnings. 

ODC’s third-quarter fiscal 2024 sales reached $106.8 million, marking 12 consecutive quarters of year-over-year growth. The company increased its dividend 7% for the 21st consecutive year. Product launches like Cat’s Pride Antibacterial Clumping Litter enhance its competitive edge. 

Yet, SG&A expenses grew 51% year over year in third-quarter fiscal 2024, reducing operating income 28%. Agricultural and animal health product sales fell 24% and 17% year over year, respectively. ODC's heavy reliance on Walmart for a significant portion of its sales makes its revenues vulnerable to volatility. High advertising costs impacted the company's profitability.

(You can read the full research report on Oil-Dri Corporation of America here >>>)

Other noteworthy reports we are featuring today include T-Mobile US, Inc. (TMUS), Enbridge Inc. (ENB) and Electronic Arts Inc. (EA).

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

Solid Top Line & Strong Cash Flows Drive UnitedHealth (UNH)

P&G's (PG) Productivity & Cost Savings Plan to Boost Margins

Focus in Asia Region, Rates Aid HSBC (HSBC), High Costs Ails

Featured Reports

T-Mobile (TMUS) Rides on Solid Customer Growth, Strategic Buyout
Per the Zacks analyst, rising demand for postpaid services will likely boost T-Mobile's top line. The buyout of U.S. Cellular's wireless operations will improve its competitive edge in the industry.

Enbridge (ENB) Gains From Long-term Transportation Contracts
Enbridge generates stable fee-based revenues from its long-term oil and gas transportation contracts. Yet, its significant debt exposure concerns the Zacks analyst.

Electronic Arts (EA) Banks on Strong Portfolio, User Addition
Per the Zacks Research analyst, expanding user base driven by strength in popular franchises including FIFA and Madden NFL is aiding Electronic Arts' top-line amid stiff competition.

Solid Portfolio Aids Wheaton Precious (WPM) Amid Low Grades
Per the Zacks Analyst, Wheaton Precious will gain from its solid portfolio of assets. However, lower grades will impact production in 2024.

Robust Healthcare Revenue Aids STERIS Amid Macro Woes
The Zacks Analyst is upbeat about STERIS's robust growth in the Healthcare business segment. Yet, macroeconomic woes in the form of escalating operating expenses dent profit.

TEVA's New Drugs & Generic Stability Are Reviving Growth
The Zacks analyst believes newer drugs, Austedo and Ajovy as well as a stable generics business are reviving its top-line growth.

Clean Energy Focus, Strategic Acquisitions Aid Evergy (EVRG)
Per the Zacks analyst, Evergy gains from its expansion of operations in the transmission market through strategic acquisitions. It aims to add more renewable assets, which should boost its performance

New Upgrades

Solid Project Wins & Accretive Buyouts Benefit EMCOR (EME)
Per the Zacks analyst, EMCOR is benefiting from demand strength across its large and growing market sectors, especially for construction activity. Accretive acquisitions are also aiding the uptrend.

Increase in New Insurance Written Aid MGIC Investment (MTG)
Per the Zacks analyst, MGIC Investment is poised to grow on higher insurance in force, improved direct premium yield, higher annual persistency, lower claims and a strong capital position.

Wolverine's (WWW) Product Initiatives to Boost Market Share
Per the Zacks analyst, Wolverine is actively pursuing a comprehensive strategy to enhance brand portfolio, focusing on Merrell and Saucony brands. These efforts are expected to help gain market share.

New Downgrades

Reduced Demand for Paper-Related Products Hurts Xerox (XRX)
Per the Zacks analyst, Xerox is grappling with decreased demand for paper-related systems and products. Rising competition is concerning.

Owens Corning (OC) Impacts From Lower Volumes & Inflation
Per the Zacks analyst, Owens Corning witnessing lower volumes in Composites and Roofing segment. Also, inflationary pressure, macroeconomic trends and geopolitical tensions continue to impact growth.

Rising Crude Oil Price, Labor Shortage to Hurt Hexcel (HXL)
Per the Zacks analyst, rising crude oil prices may adversely impact Hexcel's operating results. Supply chain constraints and shortage of skilled labor also remain a concern for the stock.

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

UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

Procter & Gamble Company (The) (PG) : Free Stock Analysis Report

Enbridge Inc (ENB) : Free Stock Analysis Report

Electronic Arts Inc. (EA) : Free Stock Analysis Report

T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report

HSBC Holdings plc (HSBC) : Free Stock Analysis Report

Oil-Dri Corporation Of America (ODC): Free Stock Analysis Report

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