Friday, February 12, 2021
The Zacks Research Daily presents the best research output of our analyst team. Today’s Research Daily features an update on the ongoing Q4 earnings season, in addition to featuring new research reports on 16 major stocks, including Toyota Motor (TM), PepsiCo (PEP) and BlackRock (BLK). 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 Friday, February 12th)
For the 372 S&P 500 members or 74.4% of the index’s total membership that have reported Q4 results already, total earnings are up +4.6% from the same period last year on +2.9% higher revenues, with 80.4% beating EPS estimates and 77.7% beating revenue estimates.
This is a notably better performance relative to what we have been seeing from this group of index members in the first three quarters of 2020.
Looking at Q4 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings are on track to be up +2.9% on +2.6% higher revenues, with the Technology and Finance sectors helping the index growth turn positive after three back-to-back quarters of declines.
Positive guidance and favorable commentary management teams is helping estimates steadily go up. For 2021 Q1, total earnings are now expected to be up +17.7% on +4.7% higher revenues. This is up from +12.6% at the start of January and +11.7% in mid-December 2020.
For full year 2021, S&P 500 earnings are now expected to be up +27.6%, after the -16.6% decline in 2020. In terms of index ‘EPS’, this works out to $166.88 for 2021, up from $130.74 in 2020 and $156.68 in 2019.
Today’s Featured Research Reports
Toyota shares have underperformed the Zacks Foreign Automotive industry over the past year (+12.6% vs. +31.1%). The Zacks analyst believes that Toyota’s focus on developing electric and driverless cars are likely to boost revenues, going forward.
Toyota put up a stellar show in fiscal third quarter 2021, with earnings and sales not just beating estimates but also rising year over year. The upward revision of its fiscal 2021 view is encouraging. While most of its peers are slashing production targets, Toyota does not expect the chip shortfall to impact near-term production.
The firm’s sharp focus on electric vehicles (EVs) and driverless cars offer ample growth visibility. Partnership with Subaru and Mazda is likely to drive Toyota’s electrification plans. Collaboration with Hino, Aurora, Uber and Pony.ai also augur well.
(You can read the full research report on Toyota here >>>)
Shares of PepsiCo have lost -2.2% in the last six months against the Zacks Soft Drinks Beverages industry’s gain of +3.5%. The Zacks analyst believes that PepsiCo’s robust fourth quarter results were driven by resilience and strength in the global snacks and foods business and gains in the beverage category.
The snacks/food business benefited from increased at-home consumption trends. The company also gained from its strong portfolio of brands, a responsive supply chain and flexible go-to-market systems, which helped maintain continued supplies.
Moreover, it provided an upbeat view for 2021. However, it witnessed soft margins on incremental COVID-19 related costs. Also, adverse currency rates remain a headwind.
(You can read the full research report on PepsiCo here >>>)
BlackRock shares have gained +7.8% over the past three months against the Zacks Investment Management industry’s rise of +16.2%. The Zacks analyst believes that initiatives to restructure the equity business will likely keep supporting top-line growth.
Its fourth-quarter 2020 results were aided by growth in revenues. The company’s strategic acquisitions have helped it expand footprint and market share. Further, solid assets under management (AUM) balance are expected to continue to aid revenue growth despite the pandemic-related concerns.
Given a solid liquidity position, BlackRock’s capital deployments look sustainable. However, persistently increasing expenses (owing to higher administration costs) are expected to hurt the bottom line. Further, the company’s high dependence on overseas revenues makes us apprehensive.
(You can read the full research report on BlackRock here >>>)
Other noteworthy reports we are featuring today include Amgen (AMGN), Edwards Lifesciences (EW) and The Allstate (ALL).
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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
Toyota (TM) to be Aided by Collaboration With Mazda & Subaru
Momentum in PepsiCo’s (PEP) Snacking Business to Aid Growth
Buyouts, Active Equity Focus Aid BlackRock (BLK), Costs Ail
Amgen’s (AMGN) Pipeline Progresses Rapidly
Amgen is rapidly advancing its innovative pipeline, most notably sotorasib and tezepelumab. Important data readouts are expected in 2021, which the Zacks analyst says could be important catalysts.
Edwards Lifesciences (EW) Gains From Robust Product Uptake
The Zacks analyst is upbeat about the strong adoption of Edwards Lifesciences’ products amid the pandemic.
Improving Top line, Solid Balance Sheet Aid Allstate (ALL)
Per the Zacks analyst, Allstate benefits from healthy revenue stream, courtesy of broad product suite and pricing discipline.
Acquisitions, Improved Defense Budget Aids TransDigm (TDG)
Per the Zacks Analyst, TransDigm strengthens its position in proprietary aerospace component’ markets, via strategic acquisitions.
Dividends Boost Old Dominion (ODFL), Freight Softness Ails
Despite the recent improvement, the freight scenario is bleaker than the year-ago picture. However, the company’s efforts to pay dividends even amid current market volatility please the Zacks analyst.
Pharmaceutical Distribution Unit Aids AmerisourceBergen (ABC)
Per the Zacks analyst, robust Pharmaceutical Distribution segment, driven by higher volume and expanding customer base, continues to aid AmerisourceBergen.
Mohawk’s (MHK) Inorganic Drive Strong, Rising Costs Hurt
Per the Zacks analyst, Mohawk’s endeavor to pursue numerous acquisitions to broaden its geographic presence and product portfolio are encouraging amid rising raw material costs.
Adoption of Cloud, Security & Analytics Solutions Aids IBM
Per the Zacks analyst, IBM’s blockchain, cloud and ML capabilities, among others poises its offerings well to gain robust adoption. Also, synergies from Red Hat acquisition hold promise.
Expanding User Base, Content Portfolio Aids SiriusXM (SIRI)
Per the Zacks analyst, SiriusMX is benefiting from strength in subscriber base backed by a solid content portfolio and expanded podcast efforts.
Portfolio Strength, Digital Revenues Steers Take-Two (TTWO)
Per the Zacks analyst, Take-Two’s digital revenues is driven by solid demand for NBA 2K21 and NBA 2K20, Grand Theft Auto Online and Red Dead Redemption 2 games.
Low Demand, Adverse Regulations to Hurt Essex Property (ESS)
Per the Zacks Analyst, Essex Property’s urban submarkets will see soft demand amid exodus, and high supply. Due to eviction moratoriums and regulations, delinquencies will be high.
Higher Input Costs, Lower Volumes Weigh On FMC Corp (FMC)
Per the Zacks analyst, higher raw material costs due to tight supply amid the pandemic will hurt the company’s margins. Lower volumes due to reduced cotton acreage in Brazil are another concern.
Pilgrim’s Pride (PPC) Troubled by Sluggish U.S Operations
Per the Zacks analyst, Pilgrim’s Pride has been troubled by lower sales in the U.S. operations for a while now. Nevertheless, strength in European operations is offering respite.
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Toyota Motor Corporation (TM) : Free Stock Analysis Report
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
BlackRock, Inc. (BLK) : Free Stock Analysis Report
The Allstate Corporation (ALL) : Free Stock Analysis Report
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