Earnings Season Scorecard and Fresh Analyst Reports for Chevron, Merck & Others

Monday, January 20, 2025The 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 Chevron Corporation (c), Merck & Co., Inc. (MRK) and QUALCOMM Incorporated (QCOM), as well as two micro-cap stocks CSP Inc. (CSPI) and AMCON Distributing Company (DIT).  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 >>>Global Weeky Ahead Discusses the key market moving developments this week. A New U.S. Presidency Begins: Global Week Ahead Q4 Earnings Season Scorecard While no earnings releases are scheduled for today on account of the MLK Day holiday, the rest of this week will see more than 100 companies report Q4 results, including 36 S&P 500 members. With results from 42 S&P 500 as of Friday, January 17th, we will have seen results from roughly 15% of the index's membership by the end of this week. Total earnings for the 42 index members that have reported results already are up +21.8% from the same period last year on +7.3% higher revenues, with 81% beating EPS estimates and 71.4% beating revenue estimates. This is a notably better showing from this group of 42 index members relative to what we have seen from this same group in other recent periods, particularly on the growth front. Looking at Q4 as a whole, combining the actual results from the 42 index members with estimates for the still-to-come companies, total earnings are expected to be up +8.5% on +4.8% higher revenues. Featured Analyst Reports Chevron shares have outperformed the Zacks Oil and Gas - Integrated - International industry over the past six months (+8.1% vs. +0.8%). The company is a fully integrated energy firm, Chevron is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin.Further, the planned acquisition of Hess Corporation is expected to significantly strengthen Chevron's presence in oil-rich Guyana. However, the company is grappling with high sensitivity to oil price fluctuations and relatively expensive valuation.Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.(You can read the full research report on Chevron here >>>)Shares of Merck have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-17.2% vs. -3.4%). The company is facing generic competition for several drugs, rising competitive pressure on diabetes franchise and declining Gardasil sales in China may hurt the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity in 2028.Estimates have declined ahead of Q4 results. Merck has a positive record of earnings surprises in recent quarter. Nevertheless, Blockbuster drug, Keytruda, and new products have been driving Merck’s sales.With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth. Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline and is investing in M&A activity to strengthen its pipeline.(You can read the full research report on Merck here >>>)QUALCOMM shares have gained +13.2% over the past year against the Zacks Wireless Equipment industry’s gain of +28.3%. The company is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge. With the accelerated rollout of 5G technology, it is benefiting from investments toward building a licensing program in mobile.Qualcomm received a favorable verdict in a legal dispute against Arm Holdings, allowing the company to continue developing high-performing, best-in-class products based on Oryon ARM-compliant custom CPUs.However, it faces stiff competition in the mobile phone chipset market. The majority of its customers include Chinese manufacturers, which further clouds the revenue-generating potential, owing to strained bilateral trade relationships with the United States. The high debt burden is a concern.(You can read the full research report on QUALCOMM here >>>)Shares of CSP have outperformed the Zacks Computer - Integrated Systems industry over the past year (+45.1% vs. +2.9%). This microcap company with market capitalization of $160.59 million have ended fiscal 2024 with $30.6 million in cash, up from $25.2 million, enabling growth investments like AZT PROTECT and high-margin services while maintaining a debt-free balance sheet.Recurring revenue rose to 17% of sales, driven by managed services and cloud solutions. AZT PROTECT gains traction via Rockwell partnerships and major contracts, enhancing cybersecurity market positioning. Niche expansions in cruise and freightliner markets diversify revenue. Strategic shifts to high-margin offerings improve profitability, supported by partnerships and industry awards.However, CSP posted a $1.9 million operating loss, with rising SG&A costs and dependence on key customers adding revenue volatility. HPP segment revenue fell 40%, hurt by legacy product phase-outs. Scaling new products demands heavy investment, pressuring near-term results.(You can read the full research report on CSP here >>>)AMCON Distributing’s have underperformed the Zacks Retail - Supermarkets industry over the past year (-39.5% vs. +68.4%). This microcap company with market capitalization of $81.41 million have reliance on declining cigarette sales, rising costs, regulatory risks and competitive pressures pose challenges. With $121.3 million in debt and increasing interest expenses, AMCON must navigate cost pressures to sustain growth.Nevertheless, AMCON's strategic acquisitions, including Arrowrock Supply, have expanded its distribution network to 14 centers across 34 states, enhancing reach to 8,000 retail locations and driving economies of scale, operational synergies, and revenue diversification.Fiscal 2024 wholesale revenue rose $171.6 million, driven by acquisitions and growth in alternative tobacco, confectionery, and foodservice categories. Its health and wellness retail segment benefits from rising demand for natural products, achieving a gross margin of 36.7% in fiscal 2024. Investments in logistics, including new facilities in Colorado and Missouri, bolster operational efficiency.(You can read the full research report on AMCON Distributing here >>>)Other noteworthy reports we are featuring today include Deere & Company (DE), Synopsys, Inc. (SNPS) and DTE Energy Company (DTE).Director of ResearchSheraz MianNote: 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 ReadPermian Strength Supports Chevron's (CVX) Production GrowthKeytruda Drives Merck (MRK) Sales Amid Gardasil China IssuesQualcomm (QCOM) Rides on Healthy Demand, Product Innovation Featured ReportsDeere (DE) Gains from Pricing Efforts Amid Low DemandPer the Zacks analyst, low commodity prices and farm income will hurt demand for Deere's agricultural equipment. However, this will be offset by its pricing actions and cost-reduction efforts. Synopsys (SNPS) Banks on Strong Product Menu, Contract WinsPer the Zacks analyst, Synopsys' focus on strengthening its product portfolio is helping it cater to the growing demand in the EDA market. Deal wins at leading semiconductor companies is a tailwind.Investments Aids DTE Stock Amid Challenges in Energy TradingPer the Zacks analyst, DTE Energy will gain from its investments to maintain its infrastructure and efficiently serve customers. Yet, challenges in Energy Traading business offset some positives.Insulet (PODD) Banks on Omnipod 5 Expansion, Cost Woes StayThe Zacks analyst is impressed with Insulet's Omnipod 5 driving robust international growth and also expanding access to more markets. Yet, rising production costs could weigh on its profitability.ONVO Brand to Aid NIO's Growth, Operational Inefficiency AilsPer the Zacks analyst, the affordable ONVO brand is expected to drive NIO's delivery growth. However, rising SG&A expenses are likely to weigh on margins.First American (FAF) Rides on Acquisitions, Debt Level HurtPer the Zacks analyst, a number of buyouts have helped First American to boost its core business, expand valuation and data business. However, increased debt raises financial risk.TripAdvisor (TRIP) Benefits From Tripadvisor Core StrengthPer the Zacks analyst, growing momentum in Tripadvisor-branded display and platform, and Tripadvisor experiences is aiding the company's Tripadvisor Core segment.New UpgradesB2B Strategy & Expansion Efforts Aid William-Sonoma (WSM)Per the Zacks analyst, William-Sonoma benefits from its B2B initiative and e-commerce business. Also, the emphasis on expansion efforts and marketing initiatives bode well.Tyson Foods (TSN) Benefits From Robust Chicken SegmentPer the Zacks analyst, Tyson Foods is gaining from demand in its Chicken unit. It expects Chicken segment AOI of $1-$1.2 billion for fiscal 2025, reflecting high single-digit growth at the midpoint.Healthy Demand for Premier Office Spaces Aids SL Green (SLG)Per the Zacks analyst, healthy demand for premier office spaces, a solid tenant base with long-term leases and opportunistic investments to enhance portfolio quality bode well for SL Green. New DowngradesJ. B. Hunt (JBHT) Continues to Grapple With Segmental WeaknessThe Zacks Analyst is worried about the fact that lower revenues across the majority of the segments, higher equipment-related costs, and higher insurance and claims expenses hurt J. B. Hunt's results.Digital & China Woes Hurt NIKE's (NKE) Sales, Profit MarginsPer the Zacks analyst, NIKE faces challenges from weak sales in its lifestyle segment, declining digital revenues, and issues in Greater China, resulting in soft revenues and compressed profit marginsLower Liquidity & High Debt Levels Hurt Navient (NAVI)Per the Zacks analyst, lower cash levels, along with high debt, pose significant risks to Navient's financial stability. Additionally, its capital distribution plans seem unsustainable.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report Merck & Co., Inc. (MRK): Free Stock Analysis Report DTE Energy Company (DTE): Free Stock Analysis Report Deere & Company (DE): Free Stock Analysis Report Synopsys, Inc. (SNPS): Free Stock Analysis Report AMCON Distributing Company (DIT): Get Free Report CSP Inc. (CSPI): Get Free ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks