Wednesday, December 18, 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 Walmart Inc. (WMT), S&P Global Inc. (SPGI) and TotalEnergies SE (TTE), as well as two micro-cap stocks Crown Crafts, Inc. (CRWS) and Friedman Industries, Inc. (FRD). 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 >>>

Walmart’s shares have outperformed the Zacks Retail - Supermarkets industry over the past year (+86.4% vs. +82.3%). The company is benefiting from its diverse business model that spans multiple segments, channels and formats. The company's strong omnichannel strategy has boosted traffic across physical stores and digital platforms. 

Walmart emphasis on improving delivery services has been successful, contributing to steady grocery market share gains. Upsides like these, along with growth in the advertising business, fueled third-quarter fiscal 2025 results, wherein the top and bottom lines grew year over year, and e-commerce sales surged. 

However, Walmart is experiencing adverse currency movements and margin pressures from shifts in product mix. While raising its fiscal 2025 guidance, the company’s implied fourth-quarter view for revenues and operating income reflects a slowdown from the reported third-quarter figures.

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

Shares of S&P Global have gained +15.6% over the past year against the Zacks Business - Information Services industry’s gain of +20.2%. The company remains well-poised to gain from the growing demand for business information services. Buyouts help innovate, increase differentiated content and develop products. The latest service launches have been aiding the company's growth. 

Dividend payments and share buybacks boost investors' confidence and positively impact earnings per share. Increasing current ratio is a good sign for the company liquidity position. 

On the flip side, S&P Global remains vulnerable to proceedings, investigations and inquiries concerning the ratings provided, leading to legal charges, damages or fines. Growth initiatives, higher compensations and incentives raise the company's expenses. The stock has declined 4.4% in three months and we have a Neutral recommendation on it in anticipation of a halt in correction.

(You can read the full research report on S&P Global here >>>)

TotalEnergies’ shares have underperformed the Zacks Oil and Gas - Refining and Marketing industry over the past year (-17.2% vs. -15.5%). The company’s production might be impacted by security reasons in some regions and it remains exposed to acquisition-related risks as these assets contribute a sizable volume to production. A natural decline in production and its withdrawal from Russia will affect profitability.

Nevertheless, TotalEnergies’ benefits from contribution coming from startups, acquisitions, well-spread LNG assets and upstream assets located in the new hydrocarbon-producing regions. Multi-energy assets of the company spread across the globe, support its operation and allow to increase the value of shareholders. 

TotalEnergies is benifiting from cost reduction initiatives. The company is investing in clean power generation and aims to achieve net-zero emissions by 2050. In the month to date period, shares of the company have outperformed its industry.

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

Shares of Crown Crafts have underperformed the Zacks Textile - Home Furnishing industry over the past year (-4.0% vs. +26.7%). This microcap company with market capitalization of $47.1 million is facing heavy customer concentration which poses revenue risks while rising inventory levels and macroeconomic sensitivity expose liquidity pressures. Reliance on China for sourcing increases tariff and supply chain risks. Weak legacy sales signal challenges despite expanding retail channels and strong licensing opportunities.

Nevertheless, Crown Crafts’ Baby Boom buyout contributed $3.4 million to second-quarter fiscal 2025 sales and boosted the bedding and diaper bag segment by 22.7% year over year. Management projects an annualized $20 million revenue run rate, with synergies driving growth and cost efficiencies.

Gross margins improved to 28.4%, aided by Baby Boom’s higher-margin offerings, but elevated operating expenses remain a concern. Despite a manageable debt structure, long-term debt surged to $18.8 million, with interest expenses up 112.2% year over year.

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

Friedman Industries’ shares have underperformed the Zacks Metal Products - Procurement and Fabrication industry over the past year (-3.4% vs. +43.9%). This microcap company with market capitalization of $108.68 million is witnessing pricing and volume challenges in tubular segment, but benefits from steady demand. Rising costs, operational downtime, macroeconomic uncertainty and elevated debt and interest expenses present near-term risks.

However, Friedman Industries maintains a solid financial position, reducing debt by 22% in second-quarter fiscal 2025 to $35.9 million while generating $10.8 million in operating cash flow and holding $111.7 million in working capital. 

The flat-roll segment, which contributed $97.4 million in revenues, showcased resilience amid hot-rolled coil (HRC) price volatility, supported by proactive hedging strategies, though reduced hedging leaves the company vulnerable. Recent cost optimizations, including a 16.8% year-over-year reduction in selling, general and administrative (SG&A) expenses, enhance operational efficiency.

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

Other noteworthy reports we are featuring today include The Allstate Corp. (ALL), Eni S.p.A. (E) and Cloudflare, Inc. (NET).

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

Walmart (WMT) Benefits from Impressive E-Commerce Operations

Market Scan Buyout Aids S&P Global (SPGI) Amid Rising Costs

Expanding LNG & Clean Energy Assets Aid TotalEnergies (TTE)

Featured Reports

Eni's (E) Hydrocarbon Finds and Renewables Drive Growth
Eni's upstream growth, fueled by new hydrocarbon discoveries and renewable capacity expansion, supports long-term growth. However, its heavy debt reliance concerns the Zacks analyst.

Cloudflare (NET) Rides on Product Strength, Acquisitions
Per the Zacks analyst, Cloudflare is gaining from solid contributions of its growth-oriented products, primarily Cloudflare One platform. Strategic buyouts like Kivera and BastionZero are a positive.

Healthpeak (DOC) to Benefit From Solid Demand for Lab Assets
Per the Zacks Analyst, Healthpeak is likely to benefit from high demand for lab assets and rising healthcare spending by senior citizens. However, substantial debt burden remains a concern.

Strong Demand for Key Drugs Drive BioMarin's (BMRN) Sales
While BioMarin's key drugs like Vimzim and Naglazyme continue to drive sales, the Zacks Analyst is encouraged by rapid uptake for dwarfism drug Voxzogo which has opened up a new sales opportunity.

Strategic Initiatives and Expansion Aids RH Amid High Costs
Per the Zacks analyst, RH is benefiting from its ongoing investments in product transformation and platform expansion. However, elevated expenses and high debt level are a concern.

Healthy Prime Space Demand Aids Leasing for Highwoods (HIW)
Per the Zacks Analyst, healthy demand for premier office spaces aids decent leasing activity for Highwoods. Strategic expansion, a strong balance sheet are add-ons. Yet, high interest expenses ail.

Integra (IART) Rides on Solid ENT Prospects, Macro Woes Stay
Per the Zacks analyst, Acclarent's rapid integration bolsters Integra's growth outlook in the ENT (Ear, Nose and Throat) market and neurosurgery synergies. Yet, macroeconomic issues can hurt margins.

New Upgrades

Improving Top line, Solid Cash Flows Aid Allstate (ALL)
Per the Zacks analyst, Allstate benefits from a healthy revenue stream, courtesy of a broad product suite and pricing discipline. Strong cash flows enables prudent capital deployment.

Tapestry's (TPR) Strong Digital Endeavors to Boost Sales
Per the Zacks analyst, Tapestry has been directing resources toward expanding digital and data analytics capabilities. During the first quarter digital sales increased in high-single digits rates.

Dolby (DLB) Gains From Ongoing Strength In Vision And Atmos
Per the Zacks analyst, Dolby's performance is benefiting from the strong adoption of Dolby Atmos and Dolby Vision across major industries. Acquisitions bode well for the company's prospects.

New Downgrades

Clean Fuel Use, Strict Regulations Ail Arch Resources (ARCH)
Per the Zacks analyst, Arch Resources' prospects will be impacted as the rising usage of clean energy reduces demand for coal. Adherence to regulations related to coal mining will increase expenses.

High Debt Levels & Low Demand to Hurt OI Glass (OI)
Per the Zacks analyst, low volumes reflecting weak demand and OI Glass' production curtailment efforts will hurt its near-term results. Its elevated debt levels is also worrisome.

Ciena's (CIEN) Performance Hit By Soft International Demand
Per the Zacks analyst, sluggish demand trends in the EMEA and Asia-Pacific regions are affecting Ciena's performance. Intensified competition and customer concentration risk are added woes.

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

Walmart Inc. (WMT) : Free Stock Analysis Report

Eni SpA (E) : Free Stock Analysis Report

The Allstate Corporation (ALL) : Free Stock Analysis Report

Crown Crafts, Inc. (CRWS) : Free Stock Analysis Report

S&P Global Inc. (SPGI) : Free Stock Analysis Report

Friedman Industries Inc. (FRD): Free Stock Analysis Report

Cloudflare, Inc. (NET) : Free Stock Analysis Report

TotalEnergies SE Sponsored ADR (TTE) : Free Stock Analysis Report

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