Thursday, December 19, 2024

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 RTX Corp. (RTX), Honeywell International Inc. (HON) and The Charles Schwab Corp. (SCHW), as well as two micro-cap stocks Steel Partners Holdings L.P. (SPLP) and Better Choice Company Inc. (BTTR). 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 >>>

RTX’s shares have outperformed the Zacks Aerospace - Defense industry over the past year (+39.8% vs. -8.8%). The company continues to receive ample orders for its wide range of combat-proven defense products from the Pentagon and its foreign allies. It won several notable defense awards during the third quarter.

A steadily improving commercial air traffic has been bolstering commercial OEM as well as commercial aftermarket sales for the company. RTX holds a solid financial position, which enables it to make successful share repurchases.

However, rising crude price tends to put cost pressure on airlines and may affect the operating results of commercial OEM producers like RTX. The company may also be affected if China enforces its announced sanctions against its missile and defense unit. Supply-chain challenges also pose a threat to RTX’s growth.

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

Shares of Honeywell have outperformed the Zacks Diversified Operations industry over the past year (+11.1% vs. -7.8%). The company is witnessing strength in the commercial aviation and building automation businesses. The Aerospace segment is particularly strong, driven by robust demand in the aviation aftermarket.

A strong demand across the commercial aviation aftermarket and original equipment businesses is aiding the Aerospace segment. The company also continue to reward shareholders, which adds to the stock’s appeal. While acquisitions have expanded its product range and geographic reach, they have also increased the company’s balance sheet debt as well.

Weakness in the Industrial Automation segment, due to lower demand for projects, is worrisome. The weakened demand for its products within the sensing and safety technologies business is also concerning. Given the company’s international exposure, foreign currency translation remains an overhang.

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

Charles Schwab’s shares have gained +5.2% over the year-to-date period against the Zacks Financial - Investment Bank industry’s gain of +38.0%. As the company deals with low-yielding assets on its balance sheet, it plans to shrink itself to sustain profits and rely more on off-balance sheet arrangements to house deposits. This will likely exert pressure on its top-line growth.

The Zacks analyst project total revenues to rise just 2.6% in 2024. Elevated costs will hamper profitability. Though we estimate the total expense to fall in 2024, it will increase in 2025.

However, falling interest rates will support net interest margin (NIM) expansion. Its focus on repaying high-cost bank supplemental funding balances will further aid margins. We project NIM to be 2.13% in 2024. Buyouts have increased the company’s client assets. We estimate total client assets to see a CAGR of 8.8% by 2026. Solid capital distributions are another positive.

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

Shares of Steel Partners’ have outperformed the Zacks Diversified Operations industry over the past year (+6.7% vs. -7.7%). This microcap company with market capitalization of $796.20 million demonstrates consistent growth across its diversified operations, driven by strong customer demand, operational efficiency and effective execution.

The company’s robust profitability improvements reflect its focus on cost discipline, margin expansion and enhanced segment contributions. Additionally, its solid balance sheet and deleveraging efforts improve financial flexibility and reduce risks, supporting growth initiatives and investments.

Through disciplined capital allocation, including share repurchases and consistent distributions, Steel Partners reinforces its commitment to delivering shareholder value. With a diversified portfolio, successful acquisition synergies and strengthened profitability in financial services, the company is well-positioned for sustainable growth and long-term value creation.

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

Better Choice’s shares have underperformed the Zacks Retail - Miscellaneous industry over the past year (-84.8% vs. +10.4%). This microcap company with market capitalization of $3.73 million is having dependency on Asia-Pacific exposes Better Choice to regulatory, economic, and competitive risks, while liquidity concerns persist despite recent capital raises. Elevated costs for marketing and supply chain improvements remain a challenge.

Nevertheless, Better Choice delivered its first profitable quarter in Q3 2024 with adjusted EBITDA over $0.2 million and gross margins reaching 40%, driven by operational efficiencies and inventory reductions. Strong supply chain performance (97% fill rates) positions the company for sustained growth.

Asia-Pacific remains a key driver, fueled by China’s doubling pet ownership trends and demand for premium brands like Halo. The SRx Health acquisition adds scale and enables entry into veterinary pharmaceuticals, enhancing diversification. Digital sales gained momentum, with double-digit subscription growth and a 20% rise in repeat purchases.

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

Other noteworthy reports we are featuring today include Chubb Ltd. (CB), Amphenol Corp. (APH) and United Rentals, Inc. (URI).

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

Amid Supply Chain Disruption, Solid Order Growth Aids RTX

Honeywell (HON) Benefits from Strength in Aerospace Segment

Buyouts, Rate Cuts Aid Schwab (SCHW), Trading Revenues Weak

Featured Reports

Better Pricing, New Business Growth Drive Chubb Limited (CB)
Per the Zacks analyst, Chubb is set to grow on better pricing, new business growth and high renewal rates. Yet, exposure to catastrophe loss and escalating expenses remains a concern.

End-Market Strength & Diversification Aids Amphenol (APH)
Per the Zacks analyst, Amphenol benefits from commercial air, defense, industrial and mobile devices end-market demand. Diversified business model also lowers volatility of individual geographies.

Public Spending Aids United Rentals (URI) Amid Macro Risks
Per the Zacks analyst, United Rentals benefits from strong infrastructure and construction demand, the Yak acquisition and a diverse fleet. However, cyclical business nature is a concern.

TEVA's New Drugs & Generic Stability Are Reviving Growth
The Zacks analyst believes newer drugs, Austedo and Ajovy as well as a stable generics business are reviving its top-line growth.

Jabil (JBL) Rides on Healthy Demand in Multiple Verticals
Per the Zacks analyst, strength in data center infrastructure, cloud and digital commerce verticals will likely drive Jabil's top line. Solid growth in free cash flow is a tailwind.

C.H. Robinson (CHRW) Strong on Dividends Amid Freight Woes
The Zacks analyst is impressed with the company's efforts to reward shareholders. Weak freight demand and low liquidity represent major headwinds.

Core Brands Aid Flowers Foods (FLO) Amid a Tough Landscape
Per the Zacks analyst, strength in core brands has been driving Flowers Foods amid a tough consumer landscape. Unit sales of Nature's Own, DKB, Wonder Bread and Canyon Bakehouse grew in third quarter.

New Upgrades

Asset Intelligence Segment Aids Zebra Technologies (ZBRA)
Per the Zacks analyst, higher sales of printing solution and RFID products are driving Zebra Technologies' Asset Intelligence and Tracking unit. Its shareholder friendly measures are encouraging.

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 bodes well for SL Green.

Steady Flow of Commercial and Defense Orders Aids Triumph
Per the Zacks analyst, Triumph Group gains as orders keep coming from its commercial and military customers. Recovering commercial air traffic will create fresh demand and boost TGI's prospects.

New Downgrades

BP Faces Profit Pressures Amid Falling Oil Prices in 2025
Per the Zacks analyst, BP's earnings and cash flow are at risk as Brent crude oil prices are forecasted to drop to $74 per barrel in 2025, challenging its financial goals and shareholder payouts.

Weak Demand Hurts Microchip's (MCHP) Top-Line Prospects
Per the Zacks analyst, Microchip is suffering weakening demand and challenging macroeconomic environment. Persistent inflation and high-interest rates hurt prospects.

Soft Retail Pharmacy, Margin Pressure Ails Walgreens (WBA)
The Zacks analyst is concerned that a pullback in discretionary spending is hurting Walgreens' U.S. Retail Pharmacy arm. Slower generic launches and generic inflation are straining its margins too.

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

Honeywell International Inc. (HON) : Free Stock Analysis Report

Amphenol Corporation (APH) : Free Stock Analysis Report

The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report

Chubb Limited (CB) : Free Stock Analysis Report

United Rentals, Inc. (URI) : Free Stock Analysis Report

Steel Partners Holdings LP (SPLP): Free Stock Analysis Report

RTX Corporation (RTX) : Free Stock Analysis Report

Better Choice Company Inc. (BTTR) : Free Stock Analysis Report

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