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Top Stock Reports for Analog Devices, Southern Company & Canadian Pacific Railway

Wednesday, December 7, 2022

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 Analog Devices, Inc. (ADI), The Southern Co. (SO) and Canadian Pacific Railway Ltd. (CP). 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 >>>

Analog Devices’ shares have declined -10.6% over the past year against the Zacks Semiconductor - Analog and Mixed industry’s decline of -18.3%. The company is facing pandemic-induced supply-chain constraints are concerns. Further, geopolitical tensions led by Russia-Ukraine war are major overhangs.

However, strength across communication, consumer, industrial and automotive end-markets drove the results. Solid demand for high-performance analog as well as mixed signal solutions was a tailwind. Strong momentum across the electric vehicle space on the back of robust Battery Management System solutions remains a positive.

Further, growing power design wins are other positives. Solid momentum of HEV platform across cabin electronics ecosystem remains a tailwind. Considering the above-mentioned factors, the Zacks analysts expect first-quarter fiscal 2023 total revenue to rise 15.3% year over year.

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

Shares of Southern Company have outperformed the Zacks Utility - Electric Power industry over the past year (+5.8% vs. -0.8%). The company is leveraging on the demographics of its operating territories, as in healthy population and job growth, Southern Company has gradually increased its customer base.

With good rate base growth and constructive regulation, the power supplier is expected to generate steady earnings and dividend growth in the coming years.

However, its elevated leverage, along with continued timing and cost overrun issues over its Vogtle project, are major overhangs. While the electric utility holding company’s debt-to-capitalization of 58.7% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. Therefore, Southern Company warrants a cautious stance from the investors.

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

Shares of Canadian Pacific Railway have outperformed the Zacks Transportation - Rail industry over the past year (+9.5% vs. -11.0%). With gradual recovery in freight-market conditions, freight revenues are increasing. Notably, freight revenues, which account for majority of Canadian Pacific's top line, increased 6.7% in the first nine months of 2022. CP's efforts to reward its shareholders through dividends also bode well.

In third-quarter 2022, CP shelled out dividends worth C$177 million, up 39.4% year over year. Partly due to these headwinds, the stock has gained in the past year.

However, high operating expenses (up 12% year over year in the first nine months of 2022) continue to weigh on the company's bottom line. Elevated fuel costs (up 60.7% in the first nine months of 2022) are leading to increased operating expenses. High debt-to-equity ratio also does not bode well for CP as it implies that the company is aggressively financing its growth with debt.

(You can read the full research report on Canadian Pacific Railway here >>>)

Other noteworthy reports we are featuring today include Mitsubishi UFJ Financial Group, Inc. (MUFG), CME Group Inc. (CME), and UBS Group AG (UBS).

Mark Vickery
Senior Editor

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

Battery Management System Solutions Aid Analog Devices (ADI)

Southern Company (SO) Buoyed by Regulated Customer Growth


Canadian Pacific (CP) Rides on Freight Revenues, Costs Ail

Featured Reports

Inorganic Moves Aid Mitsubishi (MUFG) Despite Rising Costs
Per the Zacks analyst, Mitsubishi UFJ's inorganic growth efforts will aid in adverse business scenarios. Yet, high costs and negative interest rates in Japan are likely to hinder its profitability.

CME Group (CME) Banks on Futures Products, Expenses A Concern
Per the Zacks analyst, the company is well poised for growth with the expansion of futures products in emerging markets and OTC offerings. However, elevated expenses remain an overhang.

Inorganic Growth Moves Aid UBS Amid Regulatory & Cost Woes
Per Zacks analyst, a strong capital position and opportunistic expansions are likely to aid UBS' financials. However, higher costs and any regulatory hurdles threaten profitability.

Agilent (A) Gains from Strength in Pharma & Chemical Markets
Per the Zacks analyst, Agilent's solid momentum in the chemical and pharma markets is helping it strengthen its Life Sciences & Applied Markets Group segment.

Dollar Tree's (DLTR) Real Estate Initiatives Hold Potential
Per the Zacks analyst, Dollar Tree is on track with optimizing its store portfolio through new store openings, renovations, re-banners and closings. Its new H2, Dollar Tree Plus! and Combo Stores hold

Investments Aid DTE Energy (DTE) Amid Poor Financial Ratios
Per the Zacks analyst, DTE Energy makes disciplined investment to maintain and upgrade the reliability of its electric utility systems. Yet its poor financial ratios indicate weak solvency position.

Robust Bookings Aid Caesars Entertainment (CZR), High Cost Ail
Per the Zacks analyst, Caesars Entertainment is likely to have benefitted from pent-up demand and solid booking trends in Las Vegas. However, high costs and debt remain a concern.

New Upgrades

Airbnb (ABNB) Banks on Strong Nights & Experiences Bookings
Per the Zacks analyst, strengthening gross nights booked in non-urban areas, and recovery in both long-distance and cross-border travel are benefiting Airbnb's Nights & Experience bookings.

Strong Sales, High Client Retention Benefit Insperity (NSP)
Per the Zacks analyst, Insperity's worksite employee growth is being driven by strong sales, higher client retention and a rise in net hiring of worksite employees by the company's client base.

Solid Portfolio and Increasing Contract Wins Aid Plexus (PLXS)
Per the Zacks analyst, Plexus' performance is being driven by from strong revenue growth across all segments and regions. Also, rising manufacturing contract wins and new program ramps are tailwinds.

New Downgrades

Commodity Cost Inflation and Forex Woes Ails Autoliv (ALV)
Per the Zacks analyst, soaring costs of raw materials are likely to continue weighing on Autoliv's margins. Also, unfavorable foreign currency translations are set to impact sales by 6% in 2022.

G-III Apparel (GIII) Witnesses Weak Margins & Higher SG&A Costs
Per the Zacks analyst, G-III Apparel has been witnessing weak gross margin owing to inflationary pressures and higher warehousing costs. Also, it is seeing higher SG&A expenses for a while.

Escalating Costs, Soft Cash Flows Hurt Select Medical (SEM)
Per the Zacks analyst, a rise in expenses due to the higher cost of services might dent the company's margins. A decline in the operating cash flow remains a concern.

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

Southern Company The (SO) : Free Stock Analysis Report

Analog Devices, Inc. (ADI) : Free Stock Analysis Report

CME Group Inc. (CME) : Free Stock Analysis Report

UBS Group AG (UBS) : Free Stock Analysis Report

Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report

Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report

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Zacks Investment Research