Tuesday, January 25, 2022
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the ongoing Q4 earnings season, in addition to new research reports on 12 major stocks, including Mastercard Incorporated (NYSE:MA), Pfizer Inc. (NYSE:PFE), and Citigroup Inc. (NYSE:C). 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 >>>
Q4 Earnings Season Scorecard (as of Tuesday, January 25th)
Including all of this morning's earnings releases, we now have Q4 results from 79 S&P 500 members or 15.8% of the index's total membership. Total earnings for these 79 companies are up +21.9% from the same period last year on +11.3% higher revenues, with 84.8% beating EPS estimates and 78.5% beating reveue estimates.
The Q4 EPS and revenue beats percentages are within historical ranges, though below what we had seen from the same group of companies in the first three quarters of the year.
The revisions trend for current (2022 Q1) and coming quarters appears to have turned positive after modestly turning negative in the comparable period to the preceding earnings season.
It will be a notable positive for the market if this favorable turn on the revisions front continues through the rest of this earnings season.
Today's Featured Research Reports
Shares of Mastercard have outperformed the Zacks Financial Transaction Services industry over the past year (+6.6% vs. -24.4%). The Zacks analyst believes that Mastercard's profit levels are rising thanks to higher consumer spending. It executed several acquisitions, which helped to grow its addressable markets and drive new revenue streams.
Deal wins, renewed agreements and an expanded service suite are expected to aid long-term growth. The COVID-19 crisis accelerated the use of electronic payments with much greater adoption of digital and contactless solutions. This provides an opportunity for Mastercard's business to expedite its shift to the digital mode.
However, steep costs might stress margins. High rebates and incentives may weigh on revenues. As such, the stock warrants a cautious stance.
(You can read the full research report on Mastercard here >>>)
Shares of Pfizer have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+38.2% vs. +8.1%). The Consumer Healthcare joint venture with Glaxo and the merger of the Upjohn unit with Mylan (NASDAQ:VTRS) has made Pfizer a smaller company with a diversified portfolio of innovative drugs and vaccines.
The Zacks analyst, however, believes that the smaller Pfizer should see better revenue growth. Pfizer expects strong growth of key brands like Ibrance, Inlyta and Eliquis to drive sales. Its COVID-19 vaccine has become a key contributor to the top line. The approval of Paxlovid, its oral antiviral pill for COVID, can bring in additional revenues in 2022.
However, currency headwinds and pricing pressure are key top-line headwinds. Concerns remain about its long-term growth prospects due to competitive pressure.
(You can read the full research report on Pfizer here >>>)
Shares of Citigroup have underperformed the Zacks Banks - Major Regional industry over the past year (+2.9% vs. +29.3%). However, Citigroup’s fourth-quarter 2021 results were driven by revenue and loan growth, while escalating expenses were concerning. Nonetheless, the company has an impressive earnings surprise history, having beaten the Zacks Consensus Estimate in the trailing four quarters.
The Zacks analyst believes that exiting the consumer banking business in announced markets will simplify operations and release $12 billion of allocated tangible common equity that can be deployed to expand institutional franchises in targeted regions. Recently, the bank revealed plans to exit the consumer, small business and middle-market banking operations in Mexico.
Meanwhile, high expenses on transformation investments and regulatory costs might limit bottom-line growth. The subdued consumer banking business might dent fee income.
(You can read the full research report on Citigroup here >>>)
Other noteworthy reports we are featuring today include Exelon Corporation (NASDAQ:EXC), Kinder Morgan, Inc. (NYSE:KMI) and CSX Corporation (NASDAQ:CSX).
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
Mastercard's (MA) Accretive Buyouts Aid, Elevated Costs Hurt
COVID Vaccine & Pill to Drive Pfizer's (PFE) 2022 Sales
Citigroup's (C) Streamlining Efforts Aids Amid Rising Expenses
Featured Reports
Cost Management & Regulated investment Aid Exelon (EXC)
Per the Zacks analyst Exelon's cost management initiatives will have positive impact on margins and its planned $27B investments through 2024 will strengthen its operation.
Kinder Morgan (KMI) to Benefit From Growing Demand for RNG
The Zacks analyst is upbeat about Kinder Morgan's huge growth potential in the RNG business, which will broaden its scope of services. However, its huge exposure to debt is concerning.
CSX Backed by Improved Freight Demand Amid Cost Headwinds
The Zacks analyst is optimistic about CSX's top line growth, thanks to improved freight demand and pricing gains. However, high costs, primarily due to rising fuel expenses are concerning.
Robust Senza Uptake Aids Nevro (NVRO) Amid Stiff Competition
The Zacks analyst is upbeat about continued strength in Nevro's flagship platform, Senza. Yet, the company's operation in a highly competitive medical device industry raises apprehension.
TopBuild (NYSE:BLD) Gains From Buyouts, Supply Woes Persist
The Zacks analyst stresses that TopBuild's systematic inorganic strategy will supplement its organic growth and expand access to additional markets and products. However, supply constraints are risks.
New Upgrades
Inorganic Growth, Reducing Costs Aid Community Heath (CYH)
Per the Zacks analyst, a series of inorganic growth measures such as buyouts have enhanced its capabilities. Moreover, its cost-curbing measures is likely to aid margins going forward.
Customer Demand Drives DICK'S Sporting's (DKS) Top Line
Per the Zacks analyst, DICK'S Sporting is gaining from solid demand and improved product assortment, driving solid sales. Q3 sales grew 13.9% year over year and 40% on a two-year basis.
New Downgrades
Cost Inflation Hurts Post Holdings' (NYSE:POST) Margin
Per the Zacks analyst, Post Holdings is grappling with escalated costs. Input and freight inflation along with increased manufacturing costs hurt the company's fourth-quarter margin performance.
Higher Costs & Supply Chain Issues Hurt PPG Industries (NYSE:PPG)
The Zacks analyst is concerned that pandemic-led supply-chain challenges could hurt the company's performance. Higher raw material and logistics costs might also impact its results.
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Citigroup Inc. (C): Free Stock Analysis Report
Exelon Corporation (EXC): Free Stock Analysis Report
Mastercard Incorporated (MA): Free Stock Analysis Report
Pfizer Inc. (PFE): Free Stock Analysis Report
CSX Corporation (CSX): Free Stock Analysis Report
Kinder Morgan, Inc. (KMI): Free Stock Analysis Report
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