Q1 Earnings Scorecard and Analyst Reports for NIKE, Toyota Motor & ConocoPhillips

Today's Research Daily features Q1 earnings season update and new research reports on NIKE, Inc. (NKE), Toyota (TM) and ConocoPhillips (COP). Read More...

Monday, April 17, 2023

The Zacks Research Daily presents the best research output of our analyst team. Today’s Research Daily features a real-time update on the Q1 earnings season, in addition to new research reports on 16 major stocks, including NIKE, Inc. (NKE), Toyota Motor Corporation (TM) and ConocoPhillips (COP). 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 >>>

Q1 Earnings Season Scorecard

Including this morning’s releases, we now hve Q1 results from 33 S&P 500 members. Total earnings for these 33 index members are up +7.7% from the same period last year on +10.1% higher revenues, with 81.8% beating EPS estimates and 69.7% beating revenue estimates.

On the earnings front, this is a better showing from this group of 33 index members than we have seen from the group in the last three reporting cycles, in terms of growth as well as the beats percentages.

With respect to revenues, the growth pace for this group of 33 index members is better than what we saw in the preceding period while the beats percentage is in-line with what we saw from the group in the 2022 Q4 reporting cycle.

Looking at Q1 as a whole, combining the actual results that have come out with estimates for the still-to-companies, total earnings are expected to be down -9.5% from the same period last year on +1.8% higher revenues. For a detailed look at the Q1 earnings season, please check out our weekly Earnings Preview report >>>>Analyzing Q1 Bank Earnings: Good or Bad?

Today’s Featured Analyst Reports

NIKE shares have outperformed the Zacks Shoes and Retail Apparel industry over the past six months (+41.3% vs. +38.7%). The company gained from the Consumer Direct Acceleration strategy, compelling product innovation and solid online show. NIKE witnessed double-digit revenue growth across North America, EMEA and APLA.

For fiscal 2023, it expects revenue growth in the high-single digits, up from the prior mentioned mid-single-digit growth and in line with our estimate of 8.6% growth.

However, NIKE witnessed decline in gross margin due to higher markdowns, increased freight and logistics costs, elevated input costs and currency headwinds. Also, elevated SG&A expenses are concerning.

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

Shares of Toyota Motor have gained +1.3% over the past six months against the Zacks Automotive – Foreign industry’s gain of +8.8%. The continued demand for vehicles and robust product lineup are set to fuel sales volumes of Toyota. The Zacks analyst expect total vehicle sales to increase around 7% year over year in fiscal 2023 to 8.8 million units.

To capitalize on the accelerated global shift to green cars, the auto giant is deepening focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness. Toyota is also committed to returning capital to shareholders via buybacks and dividends, which sparks confidence.

However, commodity cost inflation is expected to weigh on gross margins. Unfavorable foreign currency translations and high R&D expenses are also likely to limit profits. We expect net income in fiscal 2023 to decline 18.6% year over year. Thus, investors are advised to wait for a better entry point.

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

Shares of ConocoPhillips have outperformed the Zacks Oil and Gas – Integrated – United States industry over the past year (+10.3% vs. +6.7%). The company holds a bulk of acres in the unconventional plays of Eagle Ford shale, Permian Basin and Bakken shale. Significant opportunities are there for the company in the Bakken Shale, where it owns about 750 undrilled locations that could provide access to huge reserves.

ConocoPhillips projects its 2023 production at 1.76-1.8 MMBoe/d, suggesting an increase from 1.74 MMBoe/d last year. COP’s balance sheet is significantly less leveraged than the industry it belongs to. Additionally, the company announced its 2023 planned return of capital to shareholders of $11 billion.

However, ConocoPhillips is highly exposed to oil price fluctuations, which makes things challenging for the company. Also, the company been generating lower dividend yield than the industry for the past few years. As such, the stock warrants a cautious stance.

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

Other noteworthy reports we are featuring today include Automatic Data Processing, Inc. (ADP), PayPal Holdings, Inc. (PYPL) and Zoetis Inc. (ZTS).

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

NIKE’s (NKE) Sales Gain on Improved Traffic & Digital Growth

Strong Sales Fuel Toyota’s (TM) Revenues Amid Cost Woes

ConocoPhillips (COP) Banks On Oil-Rich Bakken Shale Assets

Featured Reports

Solid Business Model Aids ADP, Escalating Expenses Hurt
The Zacks analyst is positive about ADP’s business model that ensures high recurring revenues, good margins, robust client retention and low capital expenditure. Rising expenses remain a concern.

PayPal (PYPL) Benefits From Increasing Total Payment Volume
Per the Zacks analyst, PayPal’s total payment volume is rising owing to solid adoption of Venmo and merchant services. Further, growing momentum across PayPal Checkout experiences is positive.

Zoetis’ (ZTS) Derma Products Drive Sales, Supply Issues a Woe
Per the Zacks Analyst, Zoetis’ dermatology products are expected to drive up revenues in the upcoming quarters. However, supply issues in livestock and swine products, remain a woe.

New Product Development, Wide Market Reach Aid Eaton (ETN)
Per the Zacks analyst Eaton’s operations in 175 countries across the world and development of new products through ongoing R&D investments will continue to drive demand and boost profitability.

Strong Product Portfolio Aids DexCom (DXCM) Fight Competition
Per the Zacks analyst, DexCom strong product portfolio targeting the large and growing diabetes market is helping the company fight intensifying competition with entry new competing products.

Fidelity (FIS) Rides on Strategic Buyouts & Digitization
Per the Zacks analyst, multiple strategic buyouts are helping Fidelity National enhance its capabilities. Also, it is well-positioned to benefit from the digital transformation of the global economy.

Strong Momentum in the C&I Segment to Aid Generac (GNRC)
Per the Zacks analyst, Generac’s performance is likely to be cushioned by robust demand for Commercial & Industrial (C&I) products amid troubles in the Residential Products’ business.

New Upgrades

Innovations and Strong Backlog to Aid Textron’s (TXT) Growth
Per the Zacks analyst, solid order activity for Textron’s products tends to boost its backlog. Also, new product launch will enable Textron to capture more shares in the market.

Prudent Asset-Selection Efforts Aid AGNC Investment (AGNC)
AGNC Investment’s strategic portfolio repositioning efforts cushion it from interest rate risks and speedy prepayments. Adequate financial flexibility offers opportunities to enhance its portfolio.

Stratasys (SSYS) Rides on Partnership Wins, Product Strength
Per Zacks analyst, Stratasys’ expanding partner ecosystem along with firm focus on launching new products are contributing to business wins and boosting its presence globally.

New Downgrades

Pfizer (PFE) COVID Products to Hurt Top-Line in 2023
The Zacks analyst says Pfizer’s top line is expected to decline in 2023 due to potentially steep declines in sales from its COVID-19 products, Comirnaty vaccine and Paxlovid oral pill, on lower demand

Guess? (GES) Appears Troubled by Supply Chain Related Issues
Per the Zacks analyst, supply chain issues are hurting Guess?’s results. Its fiscal 2023 results were affected by severe supply-chain headwinds, which led to product shortages and cost escalations.

Dismal North America Sales to Hurt JAKKS Pacific (JAKK)
Per the Zacks analyst, JAKKS Pacific performance likely to be hurt by decline in North America and International sales. Decline in gross margin is also 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